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The Crash Scenario 2010 - A summary


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#1 DrBubb

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Posted 19 July 2010 - 04:33 AM

The Crash Scenario : Q3.2010 - A summary
Many stars and experts are forecasting a Q3 2010 crash
==========================================

: LINK to here: http://tinyurl.com/crash2010

I am getting emails, like this one:
"Can you send me the link to your page with that crash scenario please"
...so I thought it might be useful to pull the various materials together in one place.


RISK WARNING:
I hasten to point out that no market movements are guaranteed, and so you should take appropriate precautions on any trades you might do related to this scenario - and that may mean risk controls, like: using stops, options, limited leveraged, and so forth. If you are not sure what this means, be doubly cautious and limit any exposure you may have to the crash scenario, long or short, to what you can readily afford to lose. Experience has taught me that even when everything lines up perfectly, there is still a reasonably high probability chance that nothing will happen, or sometimes even the opposite move of what you expect can occur.

Having said that, I am currently carrying my biggest short position in years, maybe ever... but I also have a high level of cash.
= = = = =

To minimise confusion, let me start with this:
2-3 Weeks ago, I had received a scary email (from a different source) about what might happen, and the email I received was targetting July 8th for a catastophic event. I started a thread about it, wherein I said: "I AGREE with much of it. But I have not been expecting a CRASH before August. I have been thinking that it might be triggered by an event in August, where we see the fallout in September and October - that is the normal seasonal pattern." I wanted to start the thread, in case I was missing something. In fact, as I pulled together research for that thread, I could not find any further support for July 8th as a key date, and now that date has come and gone, with nothing extarordinary to report.

WHAT LIES AHEAD?
I am currently aggressively short and worried about some adverse events which could lead to a market crash between now and October. I see several important vulnerabilities in the markets that leave me nervous - Mainly, I think we have had excess optimism about the global economy's chances if returning to normal. The reality is, that only ultra-low interest rates and a massive global stimulus program has restored the ILLUSION OF NORMALITY, and that illusion is about to come tumbling down, as the news turns negative and stock prices collapse.

On top of this, many intelligent market observers are highlighting Q3.2010 as the probably time window for a crash, these include:

+ Robert Prechter
+ Harry Dent
+ Arch Crawford & Larry Pesavento
+ Tom Obrien
+ Charles Nunner
+ Many others, who use various other forecasting tools

I will summarise the arguments of those listed above in later postings, but first I want to show some of my own work...

== ==

Tags: Stock Market Crash 2010 , 2010 Crash, Crash of 2010, August 2010 Crash, September 2010 Crash, Cardinal Climax
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#2 DrBubb

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Posted 19 July 2010 - 04:51 AM

Dr Bubb's argument
QUOTE (DrBubb @ Jul 19 2010, 12:33 PM) <{POST_SNAPBACK}>
WHAT LIES AHEAD?
I am currently short and worried about some adverse events which could lead to a market crash between now and October. I see several important vulnearbilities in the markets that leave me nervous - Mainly, I think we have had excess optimism about the global economy's chances if returning to normal. The reality is, that only ultra-low interest rates and a massive global stimulus program has restored the ILLUSION OF NORMALITY, and that illusion is about to come tumbling down, as the news turns negative and stock prices collapse.


I have been expecting 2010 to be a bad year for some time, and back in 2009 and early 2010, I wrote several articles about Manic Swings, and the Coming Y-Shaped Depresssion for Financial Sense. My basic argument was that ultra-low interest rates were robbing savers,a nd forcing them to invest their money somewhere in pursuit of higher returns. The shift of funds into stocks, property, bonds, and precious metals has pushed asset prices to levels that are not justified by a poorly-performing economy.

Once the temporary buying from the "sugar rush" of low-rates and stimulus was done, prices would collapse back towards more normal levels.

Some key indicators that I am using, suggested that an important top was made in May 2010, and the stock market slide is beginning to get serious.

SPY / etf for S&P500 ... update


The technical & fundamental indicators that most worried me were:

+ The high was made on a key Moving Average (MA), and now those MA's are rolling over
+ The volume in the rise was weak, and it is now heavier in the drop (a technique that Tom Obrien uses)
+ Year-on-year inflation rates are rising in most countries, and so are interest rates in the healhier countries
+ Leading Indicators are negative, and staying negative, and not improving as they were in the July 2009 stock market dip (thnx DD)
+ Some early warning signs like: commodity prices, LQD-to-TLT ratio, China Stocks, and the Baltic Dry Index turned down months ago, and they continue to fall

Despite all these negative indications, if you listen to most financial news, it seems to be afloat on a cloud of optimism, and expectations about earning prospects in the secong half of 2010 and beyoind seem way too high. The "moment realisation" may hit in the second half of July, and drive stocks lower for some time.

Finally, late last week, as we came into options expiry, the market made a Hanging man formation, and that seemed to fit right in, making a perfect fractal comparison with the Oct. 6th, 1987 Hanging Man, and the big drop which followed inb on October 7th, 1987 (see below). I noticed this interesting comparison before the market opened last Friday. The market was still expected to open higher, and the big -2.97% drop in the SPX on Friday caught many less-historically minded traders by surprise.

October 1987 chart

/source: DrB's Diary, post #173 : http://www.greenener.......0476&st=160

I am not saying the Stocks must fall as far and as fast as in 1987, but I do think that a serious correction lies dead ahead.
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#3 DrBubb

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Posted 19 July 2010 - 04:51 AM

Robert Prechter, and EWI


RP thinks a sharp 3rd of Wave 3 drop may lie dead ahead...





Prechter's 2010 Prediction on Bloomberg : http://www.tradingst...t_forecast.html
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#4 DrBubb

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Posted 19 July 2010 - 04:52 AM

Harry Dent


HD uses demographics, and he thinks that baby boomers retiring and exiting the economy, will undermine it quickly, and lead to one of the sharpest drops in US history, probably within the second half of 2010.

Video:
== ==

A Crash Scenario for Late 2010

Last Thursday's nearly 1,000-point decline in the Dow Industrial during the trading session was no ...

The last time I caught up with Dent was in February when he predicted the Greek and European debt crises would get progressively worse and that the stock market would run into hurricane weather in May. He was right on.

His update on the European crisis: the markets are still in total denial about the total amount of debt in the developed countries and the ability of governments to bail out and guaranty everything. They simply can't, he says. Now we have the European version of TARP (Troubled Asset Relief Program) -- another $1 trillion in stimulus and rescue. Where does it end?

Dent, the editor of HS Dent Forecast, a monthly newsletter out of Tampa, Fla., looks for economic and geopolitical, and possibly even geological, challenges to continue to occur, and eventually our bail-out programs will not be able to respond. This is very likely to start to happen, he says, between July and August, and that will finally kill the "debt denial."

Addressing himself to what he regards as the most worrisome U.S. issue, burgeoning debt -- $14 trillion in government debt and $42 trillion in national debt, of which $17 trillion is in the financial sector alone, in turn creating unprecedented leverage in investments, Dent figures once the markets wake up to the total amount outstanding and recognize the fact that it cannot be sustained, there will be rapid deleveraging.

A contrarian and bearish as the dickens, he also takes a dim view of our economic scene. In contrast to many economists, who are looking for 3% to 3.5% GDP growth this year, Dent expects the economic roof to cave in around year end, with GDP turning negative between the fourth quarter of 2010 and the first quarter of 2011, and then worsening after that.

His chief reasoning: Serious mortgage delinquencies will continue to go straight up, meaning home prices will not come back and banks will be struck with massive loan defaults; baby boomer spending, which peaked between late 2007 and early 2010, will falter badly, and unemployment, now 9.9%, will shoot up to 15%.

/more: http://www.huffingto...e_b_573503.html
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#5 DrBubb

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Posted 19 July 2010 - 04:52 AM

Arch Crawford and Larry Pesavento

AC and LP both use "astro-cycles" and other technical indicators to forecast stock movements.


Arch Crawford sees the "most important planetary alignment in human history" on July 28 - August 1st, and he thinks that some sort of adverse "event" may be associated with this, and it could trigger a crash within days, or following the event.

+ AC on MarketViews--- :
+ AC on Financial Sense : http://www.financial...2010-0703-3.mp3 (40 mins in)
+ AC on Goldseek Radio :

/see also, another GEI thread:
Arch Crawford predicts a catastrophe this summer, He uses technical analysis and astrology:
http://www.greenener...?showtopic=9644

== == ==


Larry Pesavento expects a big slide into the next major turn date of 10-12 August. He counts 17 planetary bodies all lining up.

LP's Interview on Frisby's Bulls and Bears:
17 Planets In A Row: Beware August 10-12! : http://commoditywatc...e-august-10-12/
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#6 DrBubb

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Posted 19 July 2010 - 04:52 AM

Tom Obrien


TO'B uses volume to predict stock market action. He has been talking for months about how the weak volume in 2009's raly would make it easier to retrace that long upmove. He notes that market falls in 2010 have come on heavier volume, and in mid-July 2010, the market was again set up for a big drop

SPY with Volume ... update

...
Earnings Halts Market Rally :
http://video.foxbusi...aylist_id=87185
Tom O'Brien of Market Insights breaks down earnings season and the impact of quarterly numbers on the economy.
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#7 DrBubb

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Posted 19 July 2010 - 04:53 AM

Charles Nenner


A professor based in Holland, Nenner uses his research into past cyclical market turns, to build a projection of future ups and downs in the market. And ex-employee in the research department of Goldman Sachs, He has some excellent market calls to his credit.

Video:
Get Ready for Dow 5,000: Market Forecaster (Nenner)
http://www.cnbc.com/...44558215&play=1

"Stocks will peak in about a month, and then head south..."

/"Nenner Predicts" thread: http://www.greenener...showtopic=10592
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#8 DrBubb

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Posted 19 July 2010 - 04:54 AM

Others, like JG Savoldi ...


Savoldi likes to make some dramatic market calls, like Apple to $45 within 2011-12. He also sees a big drop in stocks in the immediate future, and is especially aware of the "fractal similarity with 1987."

He Twitters as BAM:
: http://twitter.com/BAMinvestor : http://twitter.com/BAMtrader (protected)

Recent Savoldi interviews:
1: http://bit.ly/bQSk40 - July 1st
2: http://bit.ly/cteV6l - July 14th

WS Shuffle podcasts :: http://thewallstreet.../podcasts.shtml

OTHER NOTABLE BEARS :::
================
+ Robin Griffiths, see thread, KWN & below (post #10) - thanks, LittleDavesAB
+ Fred Harrison, who wrote a book: The Crash of 2010
+ Mish Shedlock, see below
+ Gerald Celente : http://www.philstock...-crash-of-2010/
+ Ian Gordon, the Long Wave Analyst
+ Bud Kress, see thread, who expects a major low in 2012-14
+ David Rovelli, Canaccord Genuity - interviewed on Bloomberg (today)
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#9 DrBubb

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Posted 19 July 2010 - 08:32 AM

MONTHS from the Top - Latest drop starts Aug. 2000



The above chart goes with this one


Perhaps that "Target" will be reached in 2012-14, if Charles Nenner's work proves accurate.
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#10 littledavesab

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Posted 19 July 2010 - 09:13 AM

Think you can add

QUOTE (DrBubb @ Jun 28 2010, 08:56 AM) <{POST_SNAPBACK}>
Robin Griffiths Interview/ Friday, June 25, 2010
http://www.kingworld..._Griffiths.html
Robin Griffiths is Cazenove Capital Managementís Private Wealth Strategist - Robin has 44 years investment experience and is considered to be one of the top strategists in the world.


Thought he was quite good on KWN

In edit:
The West has been in a secular downturn since the year 2000. We are in the Kondratief winter phase, which last occurred in the 1930's.
. . .
The S&P500 index might rally until early August but resistance at 1150 will remain unbroken. It will then drop back to 940 in October. We would then rally through to March 2011. In a normal year that rally would last until late May. There is little chance of that this time. The double dip will follow and the index will re-test the lows of March 2009.

Although we are now in the phase that is equivalent to the depression years, it may be that the economy bumps along with low growth in the 1-2% range. This would be our best-case scenario.

America must learn once more to be prudent, frugal and hard working. It must start exporting again and be competitive. It must stop living on borrowed money and hand outs. It has shown before that when the going gets tough, the tough get going.

Inflation / Deflation ?? How about STAGFLATION everyone is right but everyone is wrong!
- (Update) Everyone wrong...... except Goldman Sachs apparently !!!!!!!

If you have an idea for podcast of the week post it here: http://www.greenener...pic=10990&st=40

#11 signofthetimes

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Posted 19 July 2010 - 09:39 AM

Fred Harrison ?
I'm a renter, please accept my dead money

#12 DrBubb

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Posted 19 July 2010 - 09:39 AM

Mish Shedlock is also bearish.

I believe that he has a target of SPX 400-500, and that's because he is looking at EARNINGS and realises that many analysts are busy fooling themselves and their clients:

Forward S&P 500 earnings estimates are outrageously optimistic as noted in Hussman on Misallocating Resources, Market Valuations, Earnings Estimates, and Public Policy.

Reasons for Nonsensical Earnings Estimates

+ Analysts do not do their homework on what is really happening and why. Instead they see rising earnings and take them at face value, nearly always figuring following quarters will be better yet.
+ Analysts do not understand the dynamics of debt deflation, peak credit, the baby boomer retirement dynamics, etc. In short, Analysts do not understand the global macro picture is bleak.
+ Analysts look at a steep yield curve and think the Fed can lift the economy.
+ Analysts have not yet caught on to the fact that consumer spending and bank lending attitudes have changed for good.
+ Analysts in general have a vested interest in getting the public to buy stocks, annuities, etc. because that is how they make money.

US Banking Earnings are a Sham

/see his recent Blog posting: http://globaleconomi...s.blogspot.com/
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#13 Carlton

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Posted 19 July 2010 - 11:52 AM



This is one of the few things I have seen or read that convinces me that a breach of the March 2009 lows is likely.
"After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!" --Jesse Livermore

#14 DrBubb

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Posted 19 July 2010 - 12:02 PM

QUOTE (Carlton @ Jul 19 2010, 08:52 PM) <{POST_SNAPBACK}>
This is one of the few things I have seen or read that convinces me that a breach of the March 2009 lows is likely.

Indeed.
SPX-666 was only back to "mid-channel".
I am trying to work out what the bottom the channel would be...

I suppose that since the Peak was about 2x SPX, then the low might be half of SPX-666, ie: SPX-333.
And it may be fair to adjust that figure upwards with inflation: so maybe SPX 333-400?

SPX chart ... raw chart : 1990-2012 : 2000-2012


That future low, would be ABOVE the low just after the Oct. 1987 Crash : Oct.19. 1987 = SPX-224.83

Meantime, if SPX-1000 is taken out, stocks could easily fall to SPX-800 or lower fairly quickly .. update


spy .. update : 1yr-SPY : 6mo-SPY : 3mo-SPY

The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#15 DrBubb

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Posted 20 July 2010 - 04:49 AM

QUOTE (callmejoe @ Jul 19 2010, 03:24 PM) <{POST_SNAPBACK}>
Another interview (16 July?) with Arch Crawford
End of civilisation as we know it?
http://www.youtube.c...feature=channel

Short and scary, especially the interviewers eyes.

This may or may not be relevant...

Monster sunspot groups appear on the Sun!


Phil Plait, the creator of Bad Astronomy, is an astronomer, lecturer, and author. After ten years working on Hubble Space Telescope and six more working on astronomy education, he struck out on his own as a writer. He has written two books, dozens of magazine articles, and 12 bazillion blog articles.
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#16 DrBubb

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Posted 22 July 2010 - 02:01 AM

(I still need to check these links):

Check this video out -- The 1929 Crash Vs. the Coming Stock Market Crash
http://bit.ly/nImST - per JG Savoldi (a few months early?)

1:40 AM Oct 1st, 2009 via web
http://bit.ly/3xxVqx via @addthis

9:15 PM Sep 23rd, 2009 via web
The Disco is on Fire! Will you make it to the exit? http://bit.ly/2jLh36 via @AddToAny
3:08 AM Sep 23rd, 2009
50 Percent Crash Coming for Stock Market? Hedge Fund Financial Model Shares Predictions on Twitter for Free - http://shar.es/1rd1x
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#17 DrBubb

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Posted 25 July 2010 - 03:43 AM

Louise Yamada remains Cautious, expects further downside

July 12, 2010: Pimm Fox interviews Louise on Bloomberg Radio's Taking Stock.

Topics include the character of recent equity market rallies, the relationship between gold and interest rates, importance of preservation of capital, risk as related to the AAA Treasury premium, and the current movement of assets from mutual funds into bond funds. Podcast of the interview is available a:t bloomberg.com/podcasts/taking-stock

http://www.lyadvisor...ecentevents.htm
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#18 DrBubb

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Posted 27 July 2010 - 05:51 AM

QUOTE (DrBubb @ Jul 27 2010, 07:24 AM) <{POST_SNAPBACK}>
Yesterday once more? - Is it 1937?

In 1937 the economy was in a strong recovery from a severe crisis, and there was complacency that the worst was over -- much like the exuberance about a "V-shaped' recovery this April. But after 1937 the economy relapsed into what historians call "the recession within the Depression," a downturn so severe that in any other context it would qualify as a depression itself.

It was triggered by a set of very specific policy mistakes. The Fed tightened by raising reserve requirements. Consumers were hit with new taxes to pay for the then-new Social Security program. Worried about excessive deficits, Roosevelt cut government spending. At the same time, his administration accelerated antibusiness rhetoric and regulation.

Sound familiar? We're repeating some of the same mistakes right now, even as fears of a "double dip" recession mount


/source: http://trendmacro.co...09luskinWSJ.asp


SPY ... update

OTHER MARKETS - Same Period

Japan's Nikkei 225 / JP:1804610 ... update


FTSE/Xinhua A50 China Tracker / HK:2823 ... update


Hong Kong's Hang Seng / HK:1804580 ... update


UK's FTSE-100 / UK:UKX ... update


Germany's DAX / Germ:DAX ... update


SPAIN vs. GREECE : 1yr-Bovespa-vs-ASE-20 : 3mo.BvsA20

Spain's Bovespa / XX:INDX ... 3yr-W : 3yr-D : 1yr-D : 6mos-D


Greece's ASE-20 / XX:FTSE ... 3yr-Wk : 3yr-D : 1yr-D : 6mo-D

The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#19 DrBubb

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Posted 27 July 2010 - 03:30 PM

... from DrBubb's diary today ...

QUOTE (Van @ Jul 28 2010, 12:17 AM) <{POST_SNAPBACK}>
Yeah, gold taking a beating, and the gains of today on equities markets are being wiped out. If this reversal stays in place, it could well mark a short term turning point. I've tightened my stops on my US Builder positions and am contemplating a shorting the market.
Edit: Today looks a good day to go short, so I've opened short FTSE position. Stoploss @ 5397.

A really lovely reversal, and at one of the key resistance levels. ... update


This could be a classic turn, and after many shorts were covered, and former bulls "gained confidence",
and jumped back with longs.

FTSE and DAX seem to be giving up their gains too.
The market is "bipolar", swinging back and forth from a focus on Inflation to Deflation. Bet on swings; and stay flexible. What are bipolar markets? See: http://tinyurl.com/GEI-Manix

#20 bigtbigt

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Posted 27 July 2010 - 09:02 PM

QUOTE (Carlton @ Jul 19 2010, 12:52 PM) <{POST_SNAPBACK}>


This is one of the few things I have seen or read that convinces me that a breach of the March 2009 lows is likely.

.
But don't forget - the gold standard was abandoned in the early 70's. After this, money lost its value at a far quicker rate, and so the trend line for the stock markets should increase substantially.

In short - those trend lines mean nothing after 1970, and following them will cause you to be far too pessimistic.





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