February 15th, 2008

10-20 days to a stock market crash

At the current rate of it’s descent of about .9/day, the 180-day moving average will cross down through the 300-day moving average and the MTI will morph into a clear bear market configuration within (300-180-90-60 day MAs with Index below all) 11 days. This is the value of all the variables as of today’s close:

180-day 1472.51
300-day 1462.70
90-day 1446.04
60-day 1415.57
Index 1349.99

This bearish arrangement has occurred 51 times over the past 44 years and stayed under the spell of this configuration for 916 trading sessions or an average of 18 days. Most of those runs were during the secular bear market of the 1970’s and the tech crash of 2001-03.

One of the largest was during the crash of 1974 when the market declined 23% over 84 trading days! Another even more devastating period was the crash of 2002 when the market declined 11% over 34 trading days.

Unless there’s a significant recovery of 6% to 1450 during the next two weeks which doesn’t seem likely, history says we’ll be entering an new extended, step downward leg of this bear market.

If you haven’t already done so, head for shelter.

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  • Pete

    I’m interested learning more about your MTI “thermometer readings.” How do I go about getting a copy of your book?

    Pete

  • Guru

    Pete, the book is in edit stage now but I’d be willing to send you some of the relevant excerpts. Send me an email at guru at stock-chartist.com with your address.

  • Anonymous

    The prediction that the market will continue to fall seems justified based on historical patterns. However, what evidence do you have of a crash-like event happening in this time period? You make quite a prediction here.

  • 13Principles

    I'm also interested in your MTI indicator. Has your book been published yet? Matthew

  • 13Principles

    I am also interested in your MTI method. Has your book been published yet?

    Matthew

  • Joe

    Matthew, the book is finished and at printer now; I'm going to get a draft copy next week. It's 270 pages, 115 graphs/tables and several chapters on Market Timing.

    I think it will be a one of a kind and will be available when I resume the blog in October.

    Thanks for asking.

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