That’s it – as far as I’m concerned a crash is underway. Earlier today I wrote that my funky little U.K. indicator said another move down was due and we are in for a bad time. Here is that chart as of the close on Wednesday:
The FTSE SMX: looking grim Credit: ADVFN
Well, here it is, another move down and a big one, at least it is as I write this, so as far as I’m concerned we are over the lip of ravine and in free fall. (It was 450 down on the Dow when I started to write this and is now 620 points down.)
So the key question now is how far can it fall?
In my mind from top to bottom of a crash on the Dow is somewhere between 25%-30%. That would mean a normal Dow crash would bring us down to around 20,000.
The Nasdaq is a different kettle of fish and quite able to drop 40%-75% and the higher the Nasdaq has flown the further it can fall.
It is the Nasdaq chart that I find the most exciting/terrifying. Here are the levels it could easily fall to in a crash:
The Nasdaq could fall to these levels Credit: ADVFN
The second point is, and I’ll reiterate it, the current Nasdaq chart is a classic bubble-shaped chart. It is the same shape as every bubble you’ll ever see and for example is the same as bitcoin last Christmas.
A Dow crash would see these sorts of levels:
The Dow could crash to these levels Credit: ADVFN
So until further notice my position is that the crash in now underway and it will take intervention to stop it.
In this modern world that is quite possible, but the markets can move fast and now with the Dow down 680 points (a further 40 since I wrote the paragraphs above) people need to swiftly decide whether they are a ‘buy the dip bull’ or a ‘run and hide bear’ or the sort of Grizzly prepared to short the market.
Happily I’m 75% cash and I’m likely to reluctantly liquidate the rest over the coming days if the Dow and Nasdaq break their recent lows.
Even if it were to bounce, this is a market that wants to crash and if it’s not doing so right now, that crash is unlikely to be far off.
Good luck to everyone, I’d like to be wrong.
Clem Chambers is the CEO private investors Web site ADVFN.com and author of Be Rich , The Game in Wall Street and Trading Cryptocurrencies: A Beginner’s Guide....