FWIW, I hope he’s wrong!, but in the interest of sharing all viewpoints, here’s Allan’s thoughts, at AllAllan’s trading site.
CRASH WARNING
There, I said it. Lets get to the facts.
(1) My coming of age in the use of charts to trade for a living came as a student of a man named Vincent Micheal. He runs a service called, "StockMarketVideo.Com". He has become increasingly bearish, based on his reading of the charts, for the past six weeks. Tonight, Wednesday, he basically said run for the hills, something bad, really bad, is about to happen to our equity markets. I have never heard Vincent in this kind of panic mode before. I am taking his warning very seriously.
(2) A few minutes before the close today Jim Dines sent out an "Interim Warning Bulletin" titled, "IS AN ALL-OUT MARKET CRASH POSSIBLE?" In it Dines downgraded all stocks to "Hold" and suggesting that geopolitical forces, including a $5 Trillion Dollar assumption of mortgage debt by the American taxpayer (and Dollar) may very well trigger imminent nastiness in our markets.
(3) The Charts. Since we are on the subject of using Ultra ETF’s as market timing vehicles (from earlier today), let’s have a look at a handful of them. Remember, these are Ultra-Short charts, so they represent the inverse of market direction, i.e. when these ETF’s go up it corresponds to the underlying market going down:
Dow30 Ultra-Short
S&P500 Ultra-Short
Ultra-Short Technology
Ultra-Short Russell 2000
All of these ETF’s are in Bullish Trends, corresponding to Bearish Trends in the equity markets. This is enough in and of itself to be short equities. But enough to call for a crash?
I have never done this before, never so loudly proclaimed a market direction, let alone a market crash. So why am I doing it now? I remember the Crash of 1987. It killed my father (he died of a heart attack 20 days after the crash). I remember the days leading up to that crash, the stock market was going crazy, up 3% one day, down 3% the next, on and on in the weeks leading up to that crash. The past month has been very similar, with nothing really working on the Long side, with the market bailing out positions on the Short side. Lehman down 25% in 30 minutes of trading yesterday. Washington Mutual down 30% today and barely a mention of it in the news.
Too, too much to ignore. This is my warning, written in a hurry on a Wednesday night, for what its worth.
What it is ain’t exactly clear
There’s a man with a gun over there
Telling me I got to beware
I think it’s time we stop, children, what’s that sound
Everybody look what’s going down.
