Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Stash Cash for Next Stock Market Flash Crash

Stock-Markets / Financial Crash Jun 07, 2010 - 11:04 AM GMT

By: Paul_Lamont

Stock-Markets

Back in February we stated: “As the chart of the Crash of 1987 below demonstrates, the 3rd wave of a market decline is usually the most distinct.” With the third wave now underway, the Wall Street Journal is reporting on the parallels between the Crash of 1987 and May 6th’s Flash Crash. We suspect that the comparison will transition to the Crash of 1929 as the selling continues. Here is why:


A Must Listen
The rumor (reported as news) that the drop was merely one trader’s error was refuted by this 11 minute audio clip from the S&P500 futures pit during the 1000 point fall. Clearly, markets are not rational calculating machines as some professors would have us believe, but a herd of emotional participants.

The S.E.C. report describes the stock plunge of Proctor and Gamble on May 6th this way: "PG declined from more than $60 to a low of $39.37 in approximately 3.5 minutes," the report said. Then the stock recovered above $60 in about one minute.”

This not only happened to P&G but numerous other S&P 500 stocks. There is precedence for this lack of liquidity (buyers AND sellers) in the stock market. It was Black Thursday; Oct 24th, 1929:

“Still, in its own way, the recovery on Black Thursday was as remarkable as the selling that made it so black. The Times industrials were off only 12 points, or a little more than a third of the loss of the previous day. Steel, the stock that Whitney (Ed note: broker used to prop up prices by the banker pool) had singled out to start the recovery had opened the morning at 205½, a point or two above the previous close. At the lowest it was down to 193½ for a 12 point loss. Then it recovered to close at 206 for a surprising net gain of 2 points for this day. Montgomery Ward, which had opened at 83 and gone to 50, came back to 74. General Electric was at one point 32 points below its opening price and then came back 25 points.”– The Great Crash: 1929. John Kenneth Galbraith, 1954.

Also note the tremendous 400+ point rally day on May 10th after the announcement of a bailout of the European banks. This reminds us of the middle of September 2008; when Lehman Brothers failed and the U.S. proposed its own bank bailout: the Tarp. During this time, the DJIA was swinging wildly around the 11,000 level. Then over the next five months, the market lost roughly 4000 points.

“We have had absurd intraday swings in prices as well as momentum.” – Bob Pisani, CNBC commentator. May 27, 2010.

What followed Black Thursday’s afternoon recovery rally was eventually Black Tuesday:

“Selling began as soon as the market opened and in huge volume. Great blocks of stock were offered for what they would bring…The air holes, which the bankers were to close, opened wide. Repeatedly and in many issues there was a plethora of selling orders and no buyers at all.”– The Great Crash: 1929. John Kenneth Galbraith, 1954.

We have obviously been waiting for an Acapulco Cliff Dive. We expect the Flash Crash is just the start.

“The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to insure that as few as possible escaped the common misfortune.” – The Great Crash: 1929. John Kenneth Galbraith, 1954.

***More For Clients and Subscribers***

The Rain in Spain
As we explained in our February report titled “Bernanke Fails His Own “Two Lessons Learned” from the Great Depression;

 “However from the Bloomberg chart below, it is Spain and Ireland that are even more important to European bank balance sheets. With European governments ‘crowding out’ private sector needs for capital and/or defaulting (causing massive losses at European banks), the risk is that a large European bank failure will generate another wave of financial crisis around the world such as happened in late 1930 and early 1931.”

The Spanish bank consolidation/failures are coming fast and furious. On May 24th Caja Sur was taken over by the central bank. On May 25th 4 banks were merged. On Friday May 28th, Spain was stripped of its Triple A rating. This new rating/pricing on Spanish debt will show up in French and German banks, which hold roughly $200B each.

"I would recommend you panic. The European banking system is in a crisis." – Hugh Hendry, Eclectica Asset Management

***This is an excerpt of our May 31st Investment Analysis Report.***

By Paul Lamont
www.LTAdvisors.net

At Lamont Trading Advisors, we provide wealth preservation strategies for our clients. For more information, contact us . Our monthly Investment Analysis Report requires a subscription fee of $40 a month. Current subscribers are allowed to freely distribute this report with proper attribution.

***No graph, chart, formula or other device offered can in and of itself be used to make trading decisions.

Copyright © 2010 Lamont Trading Advisors, Inc. Paul J. Lamont is President of Lamont Trading Advisors, Inc., a registered investment advisor in the State of Alabama . Persons in states outside of Alabama should be aware that we are relying on de minimis contact rules within their respective home state. For more information about our firm, or to receive a copy of our disclosure form ADV, please email us at advrequest@ltadvisors.net, or call (256) 850-4161.

Paul Lamont Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules