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Stock Market Crash Alert- Last Chance to Sell!

Stock-Markets / Financial Crash Oct 17, 2008 - 04:32 AM GMT

By: Anthony_Cherniawski

Stock-Markets Diamond Rated - Best Financial Markets Analysis ArticleI hope you all took the sell signal I issued on Tuesday Morning.  Even if you went short at the end of the day, you should be doing well by now.  Friday is the last chance to sell short or get out of longs.  The reason?  Things may get a bit scary from here. 

I am not kidding with my crash alert.  The conditions are real and identical to those very conditions which precipitated the Crash of 1987.  In addition, yesterday's move is only the first wave of 5.  I could not issue targets for wave (iii) of 5 until the first wave completed, so now that it is complete, here goes…

The NDX resistance is at 1350.  It doesn't have to go there, but tomorrow is another options expiration (individual stocks), so we may expect the market to carry some upward momentum through the morning hours.  Should the rally end at 1350, the normal targets appear to be 931.50 and 898.50 (a 31-33% decline).   Should we get an event like 1987, the target could even be as low as 792.  That would constitute a 41.3% decline from 1350.  I do not know which it may be, but the enormity of any of these targets is simply shocking.

 Right now, I cannot say which of these targets may be hit, but I cannot rule out any of them.  I have not revealed the next bit of information to anyone before today.  My supercycle model suggests that the ultimate low for the NDX will be near or possibly below 600 by the end of the year.  This is not something that I am comfortable talking about, but it has been there for quite a while.

The targets for the SPX are equally bearish.  My model suggests a rally through the morning in the SPX to 975.  From there, a “normal” decline should take it to 687-707, a 28-30% drop.  A crash mode has the potential to take the SPX to 619, a 36.5% decline, which would exactly mirror the final five days of the crash of 1987.    The next question is, how long will it take?  Of course, a crash scenario could take as little as 3-5 days.  That puts the possible bottom of wave (iii) of 5 around October 23, give or take a day.  Unless the market decides to do a three-for one play (waves (iii), (iv) and (v)), there may yet be another decline into the last week of the month.  Remember, I am only giving you the targets for wave (iii)!

The first alert on the BKX was published with an error.  For some reason, I had miscalculated the head-and-shoulders target.  For that I apologize.  The chart to the left contains the correction.  Even with this target, that represents a minimum 50% loss from the high of 63.13.  Wow!  A look at the bottom of the chart reveals yet another head & shoulders pattern which target may be met in December at 9.50 or lower. 

I have been inundated with phone calls asking whether this company or that might be a “buy” right now.  This tells me that we are still very high on the slippery slope of hope and nowhere near the valley of despair marking a true bottom.  There will be a lot of dry bones at the bottom of this decline.

I must say that I am already exhausted by the  volatility in this market.  I may take a well-earned vacation after this episode is over.

Many thanks for your loyalty and do the right thing!


Tony Cherniawski

We're on the air every Friday.

Tim Wood, John Grant and I are back in our weekly session on the markets. The market has been a real roller coaster ride this week. You will be able to access the interview by clicking here .

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This week's show on is packed with information about the direction of the markets. I'm on every Tuesday at 4:00 pm EDT . You can find the archives of my latest programs by clicking here .

Please make an appointment to discuss our investment strategies by calling Claire or Tony at (517) 699-1554, ext 10 or 11. Or e-mail us at .

Anthony M. Cherniawski,
President and CIO

As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

Disclaimer: The content in this article is written for educational and informational purposes only.  There is no offer or recommendation to buy or sell any security and no information contained here should be interpreted or construed as investment advice. Do you own due diligence as the information in this article is the opinion of Anthony M. Cherniawski and subject to change without notice.

Anthony M. Cherniawski Archive

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20 Oct 08, 01:33
Replay of the Crash of 87

Take a look at the US bonds, this is a perfect replay of 1987 almost to the day, it was on the corresponding Monday in late October 87 that the market fell 20% on the open and the world was not in anywhere near as much trouble as it is now.

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