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Stock Market Crash October 2015? 9 Of The 16 Largest Crashes In History Have Come This Month

Crash Warning Danger SignThe worst stock market crashes in U.S. history have come during the month of October.  There is just something about this time of the year that seems to be conducive to financial panic.  For example, on October 28th, 1929 the biggest stock market crash in U.S. history up until that time helped usher in the Great Depression of the 1930s.  And the largest percentage crash in the history of the Dow Jones Industrial Average by a very wide margin happened on October 19th, 1987.  Overall, 9 of the 16 largest single day percentage crashes that we have ever seen happened during the month of October.  Of course that does not mean that something will happen this October, but after what we just witnessed in September we should all be on alert.

Clearly, there is a tremendous amount of momentum toward the downside right now.  As you can see from the chart below, all of the gains for the Dow since the end of the 2013 calendar year have already been wiped out…

Dow Jones Industrial Average October 2015

And as I wrote about just the other day, last quarter we witnessed the loss of 11 trillion dollars in “paper wealth” on stock markets all over the planet.  The following comes from Justin Spittler

The S&P 500 fell 8%… and so did the Dow and the NASDAQ. It was the worst quarter for U.S. stocks since 2011.

Stocks around the world dropped too. The MSCI All-Country World Index, which tracks 85% of global stocks, also had its worst quarter since 2011. The STOXX Europe 600 Index, which tracks 600 of Europe’s largest companies, fell 10%. It was the worst quarter for European stocks since 2011 as well.

China’s Shanghai Composite fell 28% last quarter, its largest quarterly decline in seven years. The MSCI Emerging Markets Index fell 19%. It was the worst quarterly decline for emerging market stocks in four years.

In total, last quarter’s selloff erased nearly $11 trillion in value from stocks around the world.

Sadly, the mainstream media is assuring everyone that things are going to be just fine, and a lot of people on the Internet seem to have the attitude that “nothing is happening“.  Just like in 1929, a brief period of stabilization after the initial fall has lulled many into a false sense of security.  The following comes from Zero Hedge

Just as in 1929, the market was performing fantastic and the continuous wealth increase seemed to be unstoppable. A short 10% correction was seen as ‘healthy’ and soon a new uptrend was starting (the green line). This is exactly the same scenario we saw in the past few weeks. Market commenters said the 10% drop in the Dow Jones was a ‘healthy correction’ and we’re on our way to the next uptrend and Christmas rally.

Most people seem to assume that since I run a website called “The Economic Collapse Blog” that I must be rooting for a stock market collapse and an economic implosion, but that is not true at all.  The longer that the financial markets can hold together, the longer all of our lives can stay quiet, peaceful and “normal”.  Once the chaos begins, all of our lives will change dramatically.  No matter how much any of us have prepared, what is coming is going to deeply affect all of us at least to a certain degree.

It would be far better for me, my extended family and my friends if I am wrong about an imminent financial collapse.  Most of the people that I personally know are not even close to ready for what is coming.  And during the coming credit crunch it is inevitable that people that I personally know will lose jobs and suffer business setbacks.

Sadly, the truth is that life in America is never going to be any better than it is right now.  At some point, this stock market bubble will fully implode.  At some point, our debt-fueled prosperity will disappear.  At some point, the extraordinary recklessness of the big banks will catch up with them in a major way.

As we witnessed in 2008, our financial system is not designed to handle a severe bear market.  We should have learned some very hard lessons from the last time around, but we didn’t.  Instead, our financial system is even more vulnerable to a crisis today than it was back then.  A huge turn down by the financial markets will rip many of our top financial companies to shreds.  So a bear market would be extremely bad news, but unfortunately many prominent analysts seem to believe that this is precisely what we are now facing

Jim Cramer, the ex-hedge fund manager and host of CNBC’s show “Mad Money,” has been vocal recently on air, saying repeatedly that he doesn’t like the market now, and last week said “we have a first-class bear market going.” Similarly, Gary Kaltbaum, president of Kaltbaum Capital Management, has been sending out notes to clients and this newspaper for weeks, saying the poor price action of the stock market and many hard-hit sectors, such as energy and the recently clobbered biotech sector, has all the earmarks of a bear market. Over the weekend, Kaltbaum said: “We remain in a worldwide bear market for stocks.”

On the way up, all of the extreme risk-taking didn’t seem to matter much because everyone was making a lot of money.

But on the way down, all of the extreme risk-taking is just going to accelerate the collapse.

Personally, I do not know exactly what will happen over the next few weeks, but without a doubt I have a very bad feeling about the rest of this year.

What about you?

What do you think will happen?

Please feel free to add to the discussion by posting a comment below…

The Stock Markets Of The 10 Largest Global Economies Are All Crashing

Globe InterconnectednessYou would think that the simultaneous crashing of all of the largest stock markets around the world would be very big news.  But so far the mainstream media in the United States is treating it like it isn’t really a big deal.  Over the last sixty days, we have witnessed the most significant global stock market decline since the fall of 2008, and yet most people still seem to think that this is just a temporary “bump in the road” and that the bull market will soon resume.  Hopefully they are right.  When the Dow Jones Industrial Average plummeted 777 points on September 29th, 2008 everyone freaked out and rightly so.  But a stock market crash doesn’t have to be limited to a single day.  Since the peak of the market earlier this year, the Dow is down almost three times as much as that 777 point crash back in 2008.  Over the last sixty days, we have seen the 8th largest single day stock market crash in U.S. history on a point basis and the 10th largest single day stock market crash in U.S. history on a point basis.  You would think that this would be enough to wake people up, but most Americans still don’t seem very alarmed.  And of course what has happened to U.S. stocks so far is quite mild compared to what has been going on in the rest of the world.

Right now, stock market wealth is being wiped out all over the planet, and none of the largest global economies have been exempt from this.  The following is a summary of what we have seen in recent days…

#1 The United States – The Dow Jones Industrial Average is down more than 2000 points since the peak of the market.  Last month we saw stocks decline by more than 500 points on consecutive trading days for the first time ever, and there has not been this much turmoil in U.S. markets since the fall of 2008.

#2 China – The Shanghai Composite Index has plummeted nearly 40 percent since hitting a peak earlier this year.  The Chinese economy is steadily slowing down, and we just learned that China’s manufacturing index has hit a 78 month low.

#3 Japan – The Nikkei has experienced extremely violent moves recently, and it is now down more than 3000 points from the peak that was hit earlier in 2015.  The Japanese economy and the Japanese financial system are both basket cases at this point, and it isn’t going to take much to push Japan into a full-blown financial collapse.

#4 Germany – Almost one-fourth of the value of German stocks has already been wiped out, and this crash threatens to get much worse.  The Volkswagen emissions scandal is making headlines all over the globe, and don’t forget to watch for massive trouble at Germany’s biggest bank.

#5 The United Kingdom – British stocks are down about 16 percent from the peak of the market, and the UK economy is definitely on shaky ground.

#6 France – French stocks have declined nearly 18 percent, and it has become exceedingly apparent that France is on the exact same path that Greece has already gone down.

#7 Brazil – Brazil is the epicenter of the South American financial crisis of 2015.  Stocks in Brazil have plunged more than 12,000 points since the peak, and the nation has already officially entered a new recession.

#8 Italy – Watch Italy.  Italian stocks are already down 15 percent, and look for the Italian economy to make very big headlines in the months ahead.

#9 India – Stocks in India have now dropped close to 4000 points, and analysts are deeply concerned about this major exporting nation as global trade continues to contract.

#10 Russia – Even though the price of oil has crashed, Russia is actually doing better than almost everyone else on this list.  Russian stocks have fallen by about 10 percent so far, and if the price of oil stays this low the Russian financial system will continue to suffer.

What we are witnessing now is the continuation of a cycle of financial downturns that has happened every seven years.  The following is a summary of how this cycle has played out over the past 50 years

  • It started in 1966 with a 20 percent stock market crash.
  • Seven years later, the market lost another 45 percent (1973-74).
  • Seven years later was the beginning of the “hard recession” (1980).
  • Seven years later was the Black Monday crash of 1987.
  • Seven years later was the bond market crash of 1994.
  • Seven years later was 9/11 and the 2001 tech bubble collapse.
  • Seven years later was the 2008 global financial collapse.
  • 2015: What’s next?

A lot of people were expecting something “big” to happen on September 14th and were disappointed when nothing happened.

But the truth is that it has never been about looking at any one particular day.  Over the past sixty days we have seen absolutely extraordinary things happen all over the planet, and yet some people are not even paying attention because they did not meet their preconceived notions of how events should play out.

And this is just the beginning.  We haven’t even gotten to the great derivatives crisis that is coming yet.  All of these things are going to take time to fully unfold.

A lot of people that write about “economic collapse” talk about it like it will be some type of “event” that will happen on a day or a week and then we will recover.

Well, that is not what it is going to be like.

You need to be ready to endure a very, very long crisis.  The suffering that is coming to this nation is beyond what most of us could even imagine.

Even now we are seeing early signs of it.  For instance, the mayor of Los Angeles says that the growth of homelessness in his city has gotten so bad that it is now “an emergency”

On Tuesday, Los Angeles officials announced the city’s homelessness problem has become an emergency, and proposed allotting $100 million to help shelter the city’s massive and growing indigent population.

LA Mayor Eric Garcetti also issued a directive on Monday evening for the city to free up $13 million to help house the estimated 26,000 people who are living on the city’s streets.

According to the Los Angeles Homeless Services Authority, the number of encampments and people living in vehicles has increased by 85% over the last two years alone.

And in recent years we have seen poverty absolutely explode all over the nation.  The “bread lines” of the Great Depression have been replaced with EBT cards, and there is a possibility that a government shutdown in October could “suspend or delay food stamp payments”

A government shutdown Oct. 1 could immediately suspend or delay food stamp payments to some of the 46 million Americans who receive the food aid.

The Agriculture Department said Tuesday that it will stop providing benefits at the beginning of October if Congress does not pass legislation to keep government agencies open.

“If Congress does not act to avert a lapse in appropriations, then USDA will not have the funding necessary for SNAP benefits in October and will be forced to stop providing benefits within the first several days of October,” said Catherine Cochran, a spokeswoman for USDA. “Once that occurs, families won’t be able to use these benefits at grocery stores to buy the food their families need.”

In the U.S. alone, there are tens of millions of people that could not survive without the help of the federal government, and more people are falling out of the middle class every single day.

Our economy is already falling apart all around us, and now another great financial crisis has begun.

When will the “nothing is happening” crowd finally wake up?

Hopefully it will be before they are sitting out on the street begging for spare change to feed their family.

This Is EXACTLY What The Early Phases Of A Market Meltdown Look Like

Stock Market Collapse Toilet Paper - Public DomainThere is so much confusion out there.  On the days when the Dow goes down by several hundred points, lots of people pat me on the back and tell me that I “nailed” my call for the second half of this year.  But on the days when the Dow goes up by several hundred points, I get lots of people contacting me and telling me that they are confused because they thought the stock market was supposed to go down.  Well, the truth is that if there is going to be a full-blown market meltdown, we would expect for there to be wildly dramatic swings in the market both up and down.  A perfect example of this is what we experienced during the financial crisis of 2008.  9 of the 20 largest single day declines in stock market history happened that year, but 9 of the 20 largest single day increases in stock market history also happened that year.  If we are moving into another great financial crisis, there should be massive ups and massive downs, and that is precisely what we are witnessing right now.

On Tuesday, the Dow surged several hundred points.  There was much celebrating in the mainstream media over this, but what they failed to realize was that this was another big red flag.  And we saw this volatility carry over into Wednesday.  The Dow was up 171 points early in the day before ending down 239 points.

By themselves, those two days don’t mean a whole lot.  The key is to look at them in context.  And in context, we have already witnessed the most dramatic stock market crash since the last financial crisis.

There will be more days when the stock market absolutely plummets and there will be more days when it absolutely soars.  No stock market crash in U.S. history has ever gone in just one direction continually.  There are always giant waves of momentum that cause panic selling and panic buying.

There is one thing that could change that.  A major “black swan event” such as a historic natural disaster, an unprecedented terror attack, or the outbreak of war could potentially be enough to chase all of the buyers out of the marketplace.  And considering the times that we are moving into, those things should not be ruled out.

But minus some type of event like that, we should expect lots of wild swings in both directions.

Over the past couple of years, I have repeatedly attempted to explain the general principle that markets tend to go up when they are calm and they tend to go down when they are volatile.

If you want the bull market to return, you should be rooting for lots of really, really boring days on Wall Street.

When things are boring, investors make money.

Days that are “exciting” are really bad for Wall Street.  Investors like a world that is predictable, and when conditions start changing rapidly they get very, very nervous.

In the months ahead, trillions of dollars are going to be lost in stock markets all over the planet.  Feel bad for the retirees and the hard working families that are going to get wiped out by this, but don’t feel bad for the banksters.  They have been laughing it up while most of the country has been suffering during our ongoing economic decline.  If you don’t believe me, just check out this YouTube clip.

A lot of people are going to be paralyzed during this time, because they won’t know what to do.  They didn’t heed the warnings up until now, and they thought that they would be able to safely get out of the market when things started getting crazy.  The big ups and big downs in the markets will confuse them, and the mainstream media will be telling them that everything is just fine.

If you have been waiting for the market to send you “warning signals”, then you can stop waiting because it is happening right in front of your eyes.

Now is not a time for fear.  Personally, I seek to live my live in a constant state of peace without any fear even though I write about some very hard realities almost every day.

This is part of the reason why I so adamantly encourage people to prepare for what is ahead.  Knowledge and preparation can help eliminate fear.

If you already know what is coming and you are already prepared for it, you won’t be freaking out like the rest of the general population will be when things start really going crazy.

I want to share something with you that Brandon Smith wrote recently

Panic betrays and fear kills. The preparedness culture is built upon the ideal that one must defeat fear in order to live. How a person goes about removing uncertainty from the mind is really up to the individual. For me, combat training and mixed martial arts is a great tool. If you get used to people trying to hurt you in a ring, it’s not quite as surprising or terrifying when it happens in the real world. If you can handle physical and mental trauma in a slightly more controlled environment, then fear is less likely to take hold of you during a surprise disaster.

Six months may be enough time to enter a state of mental preparedness, it may not be, but more than anything else, this is what you should be focusing on. All other survival actions depend on it. Your ability to function personally, your ability to work with others, your ability to act when necessary, all rely on your removal of fear. Take the precious time you have now and ensure you are ready to handle whatever the future throws at you.

Life in America in the years ahead is going to look dramatically different from what life in America looks like right now.

Do you have some specific tips on getting prepared for what is coming that you would like to share with the rest of us?  Please feel free to join the discussion by posting a comment below…

Stock Market Crash 2015: The Dow Has Already Plummeted 2200 Points From The Peak

Crack The Sky - Public DomainThose that watched their stocks steadily increase in value for years are now seeing all of that “wealth” disappear at a staggering pace.  The only way you actually make money in the stock market is if you get out in time, and many Americans are discovering that all or most of their gains have already been wiped out.  At this point, the Dow Jones Industrial Average has dipped below where it was at the end of the 2013 calendar year.  That means that nearly two years of gains have already been obliterated.  On Friday, the Dow was down another 272 points, and it is now down more than 2200 points from the peak of the market back in May.  For months, I have been detailing how things were setting up for this kind of financial crash in textbook fashion, and now events are playing out just as I warned.  But this is just the beginning – what is coming next is going to shock the world.

We have already seen the 8th largest and 10th largest single day stock market crashes in all of U.S. history happen within the past few weeks.  In fact, it was actually the very first time that we have ever seen the Dow fall by more than 500 points on consecutive trading days.

On August 25th, I warned that there would be some huge rebound days where we would see lots of “panic buying”, and on August 26th we witnessed the 3rd largest single day stock market increase in all of U.S. history.

Headlines all over America trumpeted the “fact” that the stock market had “recovered”, but the mainstream media failed to mention that the only two better days for the stock market were right in the middle of the stock market crash of 2008.

In this article, I explained that this is exactly the type of market behavior that we expect to see during a full-blown market meltdown.  There are going to be even more violent swings in the market in the weeks ahead, but the general direction will be down.

Friday was definitely another down day.  The following is how Zero Hedge summarized the carnage…

  • Dow Industrials lowest weekly close since April 2014
  • Dow Transports lowest weekly close since May 2014
  • S&P 500 lowest weekly close since Oct 2014’s Bullard lows
  • Nikkei dumped over 7% this week – worst week since April 2014
  • Utilities collapsed 5.1% this week – worst week since March 2009
  • Financials lowest weekly close since Oct 2014’s Bullard lows
  • Biotechs lowest weekly close since Feb 2015
  • Investment Grade Corporate Bond Spreads worst since June 2013
  • Treasury Curve (2s30s) flattened 6bps today – biggest drop in 2 weeks.
  • JPY strengthened 2.4% on week against the USD – strongest week since August 2013 (up 4.5% in 3 weeks) – major carry unwind!

I wish I could tell you that things are going to get better, but I can’t do that.  There are some giant financial bubbles that are starting to unwind, and this process is going to take time to fully unfold.

And this is truly a global phenomenon.  Chinese stocks have been crashing horribly, Japanese stocks just had their worst week in over a year, Canada and much of South America are plunging into recession, and Europe is probably in worse shape than everyone else if you look at the fundamentals.

Even though U.S. stocks have already fallen substantially, the truth is that they easily have much farther to fall.  Yale economics professor Robert Shiller believes that we could actually soon see the Dow plunge all the way to 11,000

In what amounts to an ominous message for Wall Street, Robert Shiller, a Yale economics professor and author of Irrational Exuberance, doled out some serious bear talk this morning.

Shiller told CNBC Thursday morning that “this is a dangerous time” for the stock market.

Shiller, who has a reputation for calling market tops, warned that the Dow Jones industrial average, which closed Wednesday at 16,351, could fall as low as 11,000, a potential drop of more than 30% from current levels.

At the moment, the Dow is sitting just above 16,000, which is an exceedingly important psychological level.

If the Dow breaks below 16,000 and stays there for a few days, it is quite likely that full-blown panic will set in.

And once we see the Dow dip below 15,000, people will be going insane.

Another key indicator to watch is the VIX (the CBOE Volatility Index).  If you are not familiar with the VIX, here is  a pretty good definition from Investopedia

The ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market’s expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. This volatility is meant to be forward looking and is calculated from both calls and puts. The VIX is a widely used measure of market risk and is often referred to as the “investor fear gauge.”

Right now it is sitting at 27.80.  If the VIX rises above 40 and stays there, that will be a major red flag.

We have entered “the danger zone“, and events are going to start moving very rapidly now.  If you have been listening to the warnings, you are going to understand why things are happening and you are going to know what to do.

Unfortunately, most people are going to have that “deer in the headlights” look because they will not understand what is happening and they will be frozen by fear.

Stay tuned to this website and to End Of The American Dream because things are about to get very weird and I will do my best to explain them as the coming weeks and months play out.

So what do you think the rest of September will bring?

Please feel free to join the discussion by posting a comment below…

September 2015 Sure Started Off With Quite A Bang, Eh?

Bang Explosion - Public DomainAfter enduring their worst August in 17 years, U.S. stocks are off to their worst start to a September in 13 years.  Just yesterday, I declared that we would be entering the “danger zone” this month, and it didn’t take long for the action to begin.  Historically, this month is the worst month of the year for stocks, and most of the biggest stock market crashes throughout our history have come in the fall.  On Tuesday, the Dow plunged another 469 points, and it is now down more than 10 percent from the peak of the market back in May.  That means that we have officially entered “correction” territory.  Asian stocks also crashed hard on Tuesday, so did European stocks, and the price of oil plummeted about 8 percent.  For a long time, there have been a lot of people out there that have been warning that a financial crisis would happen in the second half of 2015, and they are being proven right.  It is actually happening.

Of course there will be plenty of ups and downs still to come.  I cannot emphasize enough that we should fully expect waves of panic selling and waves of panic buying.  This always happens during any market crash.

For instance, just consider what happened when the tech bubble crashed.  The following analysis comes from Graham Summers

In a six month period, investors moved stocks down 19%, up 8%, then down 27%, then up 21%, then down 22%, then up 34%, then down 17%, then up 16%, then down 28%, then up 16%, and finally down 17%. Only at that point did stocks break their trendline for the bubble (the blue line) and it became obvious that the bubble had burst.

My point with all of this is that even when the bubble was both very specific AND obvious, the collapse was neither quick nor clean. There were several large 20%+ crashes, but overall, it was a roller coaster with jarring rallies that gradually wore its way down.

It was a full-blown market collapse, and yet there were moments when the market absolutely skyrocketed.

The same thing happened in 2008.  In fact, the best two days in stock market history were right in the middle of the last financial crisis.

So don’t be fooled by what happens on any one particular day.  Huge up days and huge down days are both red flags.

If the market is going to recover any time soon, what we need are nice quiet days without much volatility.  Unfortunately, that is not likely to happen any time soon because a tremendous amount of damage has already been done and some massive imbalances have already developed.  I like how Richard Smith put it recently…

Serious damage has been done to the financial markets in the past two weeks – very serious. Don’t let anyone tell you otherwise.

No one should be kidding themselves that what’s happened in the past two weeks is just a little late summer blip – building up some energy to rally into the fall and winter. I’m not saying it couldn’t happen but it isn’t the odds play.

Everywhere I look, technical damage has been done – and it’s like nothing we’ve seen since 2008.

Yes, the mainstream media is telling everyone that they shouldn’t panic and that everything will be just fine, but those that study the charts for a living know what is really happening.  For months, I have been telling you over and over that things were setting up in textbook fashion for another financial crisis, and other experts have been seeing the exact same things that I have been seeing.  For example, just consider what Louise Yamada told CNBC

Looking at a chart of the S&P 500, Louise Yamada noted that momentum has been declining for four months, which by her work, is a “classic” sell signal.

“This is suggesting to me that we are looking at a bear market,” said Yamada said Tuesday on CNBC’s “Futures Now.” Yamada noted that the last two times the market saw a similar shift in momentum were in January 2008 and June 2000.

Right now, a lot of people are very confused about what to do.  Those that told them to buy stocks in the first place are telling them to buy even more stocks.  And of course the mainstream media is telling them that everything is going to be just wonderful after this “correction” runs its course.  But at the same time a lot of people have a gut feeling that things are about to get really bad.

Personally, I think that what John Hussman shared in his recent newsletter contains a lot of wisdom…

“If you’re taking more equity risk than you can actually tolerate if the market goes south, setting your portfolio right isn’t a market call – it’s just sound financial planning. It’s only fun to be reckless if you also turn out to be lucky. Market conditions are now more hostile than at any time since the 2007 peak. If you want to be speculating, and you can tolerate the outcome, then you’re not taking too much equity risk in the first place. But it’s one or the other. Can you tolerate a 40-55% market loss over the next 18 months or so? If not, take this opportunity to set things right. That’s not the worst-case scenario under present conditions; it’s actually the run-of-the-mill historical expectation.”

I also want to point out that we are now less than two weeks away from the end of the Shemitah year.

If you are still not familiar with the concept of the Shemitah year, please see my previous article entitled “The Shemitah: The Biblical Pattern Which Indicates That A Financial Collapse May Be Coming In 2015“.

Even though the stock market crashed in September 2001 at the end of a Shemitah year, and in September 2008 at the end of another Shemitah year, and it is crashing again in September 2015, somehow there are still people out there that do not think that this is real.

Well, I am here to tell you that this is very real.  But if you won’t listen to me, perhaps you will consider the findings of Israeli mathematician Thomas Pound.  The following comes from an outstanding piece that was just published by WND

After a friend told him about the seven-year Sabbatical cycle to the stock market, Pound again set out to see if the theory held up under statistical scrutiny.

Applying the same ANOVA test to the Shemitah cycle, Pound’s research revealed that the sabbatical years were the only group of years in which the market cycle averages consistent significant losses since 1871.

He also found that, in Shemitah years, the difference in loss was greater than that noted in professor Shiller’s decennial cycle.

“Statistically, it appears that the calendar years in which the Sabbatical year ends are worse than the other six years, and that difference is significant based on the data I have,” Pound told Breaking Israel News.

Look, I know that this may not fit with how you currently view the world.

The truth is that a whole bunch of weird stuff is about to happen that may not fit with how you currently view the world.

But if you honestly want to discover the truth, then you have got to go wherever the evidence ultimately leads you.

So what do you think about all of this?  Please feel free to join the discussion by posting a comment below…

CNN Tells Americans That The Stock Market Is Not Going To Crash

CNN Newsroom - Photo by Doug WaldronOn Wednesday we witnessed the third largest single day point gain for the Dow Jones Industrial Average ever.  That sounds like great news until you realize that the two largest were in October 2008 – right in the middle of the last financial crisis.  This is a perfect example of what I wrote about yesterday.  Every time the market crashes, there are huge up days, huge down days and giant waves of market momentum.  Even though the Dow was up 619 points on Wednesday, overall we are still down more than 2,000 points from the peak of the market.  During the weeks and months to come, we are going to see many more wild market swings, but the overall direction of the market will be down.

Sadly, the mainstream media is still peddling the lie that everything is going to be just fine.  So millions upon and millions of Americans are just going to sit there while their investments get wiped out.  In the six trading days leading up to Wednesday, Americans lost a staggering 2.1 trillion dollars as stocks plunged, and the truth is that this nightmare is only just beginning.

Early on Wednesday morning, CNN published an article entitled “Why U.S. stocks aren’t headed for a crash“.  I had to laugh when I saw that headline.  If CNN is going to make this kind of a claim, they better have something very solid to base it on.  But instead, these are the five reasons we were given for why the stock market is not going to collapse…

1. “The U.S. economy isn’t on the verge of a recession.”

This is exactly what all of the “experts” told us back in 2007 and 2008 too.  In America today, the homeownership rate is at a 48 year low, 46 million Americans go to food banks, and economic growth has slowed to a standstill (and that is if you actually buy the highly manipulated official numbers).  The truth, of course, is that things continue to progressively get worse as our long-term economic decline continues to unfold.  For much more on this, please see my previous article entitled “12 Ways The Economy Is Already In Worse Shape Than It Was During The Depths Of The Last Recession“.

2. “China’s effect on U.S. is limited.”

Really? Go to just about any major retail store and start reading labels.  You will likely find far more things that were “made in China” than you will American-made products.  The global economy is more interconnected than ever before, and the Chinese stock market is the second largest on the entire planet.  Of course what is happening in China is going to affect us.

3. “American businesses are doing pretty well (outside of energy).”

Actually, they were doing pretty well for a while, but now things are turning.  Many large corporations are reporting declining orders, declining revenues and declining profits.  Unsold inventories are beginning to pile up and the pace of layoffs is starting to increase.  All of the things that we would expect to see just prior to another recession are happening.

4. “The Federal Reserve sounds cautious.”

This is laughable.  Ultimately, it isn’t going to matter much at all whether the Federal Reserve barely raises rates or not.  The era of “central bank omnipotence” is at an end.  Just look at what is happening over in Europe.  All of the quantitative easing that the ECB has been doing has not kept their markets from crashing in recent days.  Those that believe that the Federal Reserve can somehow miraculously keep the stock market from crashing this time around are going to end up deeply, deeply disappointed.

5. “Stock prices aren’t crazy high anymore.”

There is some truth to this last point.  Instead of stock prices being really, really, really crazy now they are just really, really crazy.  But as I have pointed out in many previous articles, the technical indicators are very clearly telling us that U.S. stocks still have a long, long way to go down.

But let’s hope that CNN is actually right – at least in the short-term.

Let’s hope that markets settle down and that things stabilize for at least a few weeks.

In order for that to happen, markets need to become a lot less volatile than they are right now.  The rollercoaster ride that we have been on in recent days has been extraordinary

The Dow traveled another 1,600 points during Tuesday’s trading session, adding to the 4,900 points the index traveled in down and up moves on Monday.

Markets tend to go up slowly and steadily when things are calm, and they tend to go down rapidly when things are volatile.

If you are rooting for a return of the bull market, you should be hoping for nice, boring trading days where the Dow goes up by about 100 points or so.  Wild swings like we have seen on Friday, Monday, Tuesday and Wednesday are very strong indicators that we have entered a bear market.

What we have been witnessing over the past week is almost unprecedented.  Just check out this piece of analysis from Bloomberg

By one metric, investors would have to go back 75 years to find the last time the S&P 500’s losses were this abrupt.

Bespoke Investment Group observed that the S&P 500 has closed more than four standard deviations below its 50-day moving average for the third consecutive session. That’s only the second time this has happened in the history of the index.

Of course after such a dramatic plunge it was inevitable that we were going to have a “bounce back day” where there was lots of panic buying.  Initially it looked like it would be Tuesday, but it turned out to be Wednesday instead.

But if you think that the big gain on Wednesday somehow means that the crisis is “over”, you are going to be sorely mistaken.

Personally, I am hoping that we at least see a bit of a pause in the action, but there is absolutely no guarantee that we will even get that.

As the markets have been flying around, more and more Americans are becoming curious about the potential for a full-blown stock market crash.  The following comes from Business Insider

This one’s pretty easy: according to Google search trends, more Americans are searching for “stock market crash” now that at any point since the last crash.

Right now, search traffic for the term “stock market crash” is hitting about 70% of the most volume this term has ever gotten through Google search.

And so while this data doesn’t convey absolute search volume for the term, we do know that Americans appear to be looking for information about a stock market crash at the highest level in about 7 years.

Very interesting.

In addition, Americans are also becoming more pessimistic about the overall economy.  According to Gallup, the level of confidence that Americans have about the future performance of the U.S. economy is the lowest that it has been in about a year.

And remember – it isn’t just U.S. markets that are starting to go crazy.  All over the planet stocks are crashing and recessions are starting.  In fact, I can’t remember a time when there has been this much economic chaos erupting all over the world all at once.

So can the U.S. resist the overall trend and pull out of this market crash?

Please feel free to share what you think by posting a comment below…

During Every Market Crash There Are Big Ups, Big Downs And Giant Waves Of Momentum

Tsunami Tidal Wave - Public DomainThis is exactly the type of market behavior that we would expect to see during the early stages of a major financial crisis.  In every major market downturn throughout history there were big ups, big downs and giant waves of momentum, and this time around will not be any different.  As I have explained repeatedly, markets tend to go up when things are calm, and they tend to go down when things get really choppy.  During a market meltdown, we fully expect to see days when the stock market absolutely soars.  Waves of panic selling are often followed by waves of panic buying.  As you will see below, six of the ten best single day gains for the Dow Jones Industrial Average happened during the financial crisis of 2008 and 2009.  So don’t be fooled for a moment by a very positive day for stocks like we are seeing on Tuesday.  It is all part of the dance.

At one point on Tuesday, the Dow was up over 400 points, and many of the talking heads on television were proclaiming that the stock market had “recovered”.  This is something that I predicted would happen yesterday

And if stocks go up tomorrow (which they probably should), all of those same “experts” will be proclaiming that the “correction” is over and that everything is now fine.

No, everything is not “fine” now.  The extreme volatility that we are witnessing just tells us that more trouble is coming.  Early on Tuesday the market was “burning up energy” as short-term investors sought to “buy the dip”.  But now that wave of panic buying is subsiding and the Dow is only up 240 points as I write this.

Overall, the Dow is still down more than 2,200 points from the peak of the market.  Even though I specifically warned that a market crash was coming, I didn’t expect the Dow to be down this far in late August.  Even after the “rally” we witnessed today, we are still way ahead of schedule.

The truth is that what we have seen so far is just the warm up act.

The main event will unfold during the months of September through December, and right now most people could not even conceive of the things that we are going to see in 2016.

But all along, there are going to be days when stocks fly higher.  As I mentioned above, many of the “best days” in stock market history occurred right in the middle of the financial crisis of 2008 and 2009.  This is a point that Jim Quinn has made very eloquently…

Six of the ten largest point gains in the history of the stock market occurred between September 2008 and March 2009. That’s right. During one of the greatest market collapses in history, the market soared by 5% to 11% in one day, six times. Here are the data points:

2008-10-13: +936.42

2008-10-28: +889.35

2008-11-13: +552.59

2009-03-23: +497.48

2008-11-21: +494.13

2008-09-30: +485.21

Do you think these factoids will be shared with the public today on the stock bubble networks? Not a chance.

And all of the technical indicators are still screaming that U.S. stocks have a long, long way to fall.  For example, just check out this chart.  The long-term analysis has not changed one bit.

Often, it is the short-term news that drives markets on any particular day.  Tuesday began with another massive stock selloff in Asia

The Shanghai Composite, China’s main stock exchange, fell 7.6% on Tuesday – after losing 8.5% on what state media have called China’s “Black Monday”.

It was the worst fall since 2007 and caused sharp drops in markets in the US and Europe

Tokyo’s Nikkei index had a volatile day, closing 4% lower.

In another desperate attempt to stop the bleeding, the Chinese decided to cut interest rates

The People’s Bank of China has lowered its interest rate for the fifth time since November. The one-year lending has been reduced by 25 basis points to 4.6 percent; the one-year deposit rate has been cut by 25 basis points to 1.75 percent. The change comes into force on Wednesday.

This reduction in interest rates was cheered by investors all over the planet, and as a result there was a wave of panic buying in Europe and in the United States.

But none of the short-term activity changes the fact that global financial markets are absolutely primed for a giant crash.  I like how Bill Fleckenstein put it during a recent interview with King World News

I have no idea how this is going to play out, other than I know we are headed considerably lower. The fact that so few seem to understand what the actual problem is makes me even more confident about that point. It would seem that everyone is using the easy answer and blaming China, but that was just the catalyst. The market has been trading in a heavy sideways fashion for some time, expectations are way higher than can be met, the technical action has now deteriorated, and bad news actually matters at the same time that speculation has run rampant. As I have stated many times (and also noted the reasons why), you couldn’t create a more crash-prone environment if you specifically set out to do so.

What we can’t account for are “black swan events” which could greatly accelerate this financial crisis.

A war in the Middle East, a major natural disaster or a terror attack involving weapons of mass destruction are all examples of the kinds of things that could turn this market crash into full-blown market implosion.

As we move into the critical month of September 2015, I think that it is safe to say that we should all be ready to expect the unexpected.  Our world is becoming increasingly unstable, and I am extremely concerned about the period of time that we are heading into.

The nice, comfortable period of relative stability that we have been experiencing for the past few years has come to an end.  I hope that you have enjoyed the good times while you still had them.

Now we are moving into a time of tremendous chaos and rapidly shifting conditions, and it is imperative that we all work very hard to get prepared for it while we still can.

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