Grizzly's Growlings Current Report

Monday Morning Market Musings    09/05/2000

Long-time visitors to bearmarketcentral.com know we have been looking for The Crash for more months than we humbly care to admit. As we said back on May 18th: 

If the market does not begin its crash in the next two weeks or so, the Bull will have survived yet another potential turning point and likely will push ahead strongly into summer to new all-time highs. But we rate that probability on par with drawing to an inside straight.

Well, the Bull did indeed win that hand and stayed alive in the great Wall Street poker game. 

The cards have been shuffled and now once again they're stacked in the Bear's favor.

The counter-trend rally in the DJIA from the April-low has taken more than its sweet time, slowly working its way higher to close last week at 11,238.

The Elliott Wave labels on the chart paint a pretty clear picture: the DJIA is approaching the top of the a-b-c wave 2 counter-trend rally. There may be a few more days or even weeks of squiggles higher to complete the details of wave C of 2, so we'll just have to ride out any short-term rallies.

Once the wave 2 pattern is complete, the DJIA should begin the relentless wave 3 we've been anticipating. This move should include an historic crash day, probably in mid-October.

This devastating wave 3 may take several months to fully play its hand. The exact timing of THE crash won't be evident very far in advance, but the market risk will remain extraordinarily high as we head into the fall.

US STOCKS REMAIN ON FULL CRASH ALERT!

Does this scenario sound a bit familiar? Next month brings us to the 13th anniversary of The Crash of 1987. As you'll recall, the markets topped in August 1987 at the then-lofty level of 2,722. From there, it was all downhill, interrupted only by a brief countertrend rally in late September. Monday, October 19th made history with the famous 509 point, 22% crash

As you can see, the 1,000 point, 37% fall from the 2,722 high in August, is now but a blip on the chart.

From the post-crash low in December 1987, the DJIA began the greatest Bull Market in history, soaring some 10,000 points to the January 2000 peak of 11,750.

We're not anticipating an exact reply of 1987, but for illustrative purposes, a fall matching 1987's 37% would bring the DJIA crashing down to the 7,000-7,500 area. Are you ready for that potential?

For aggressive speculators, the next few weeks hold excellent potential for low-risk entry to the short side.

For longer-term investors, you may want to have a look at one or more of the mutual funds well-positioned for the down side. Please see our Great Bear Funds Page.

Please also read our disclaimer.

For some additional perspective on where we are in the big picture, please review Jim Stack's classic report, The New Paradigm...Era or Bubble. The report was published in 1998, but everything Jim said back then still rings true, and the ante has been upped a hundred-fold.

"You've got to know when to hold 'em, know when to fold 'em,
know when to walk away, know when to run."

Kenny Rodgers, "The Gambler"

grizzly@bearmarketcentral.com

Please read the disclaimer.

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