We are starting to see several indicators and patterns warning of the potential for a stock market crash to start fairly soon. These indicators and patterns are analyses independent of one another. In this weekend's Expanded Market Newsletter to our subscribers, we present the complete report that answers the question, are stocks about to crash, sharing several of this independent warning patterns and indicators.
In this article we can share one pattern that is warning of a coming stock market crash, one that could start sometime over the next several weeks, and perhaps has started with Friday's sharp selloff.
We can share with you a large Head & Shoulders Top pattern that is nearing completion, one that started in November 2009, and is finishing its right shoulder, in both the Industrials and the S&P 500. Once the right shoulder tops, and it may have this past week, a stock market crash should follow, one that takes several weeks to finish, perhaps even several months, but takes prices down over 20 percent below current levels. . A break below the Head & Shoulders neckline, below 1,040 in the S&P 500 (9,800 in the Industrials), would confirm the H&S pattern, increasing the probability of 875 being reached (8,500ish in the Industrials), which would require a crash.
There are no guarantees in this business, and our work is a study of probabilities, but we can say that the risk of a stock market crash is high at this time. That said, stocks can extend their recent rally and push back a major sell-off for several weeks before a plunge begins, so shorting is risky business and we suggest readers consult with their financial advisors before conducting any shorting transactions. Appropriate risk management controls should be put in place. Conservative investors may opt to simply sit on the sidelines during this high risk period.
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"Jesus said to them, "I am the bread of life; he who comes to Me
shall not hunger, and he who believes in Me shall never thirst.
For I have come down from heaven,
For this is the will of My Father, that everyone who beholds
the Son and believes in Him, may have eternal life;
and I Myself will raise him up on the last day."
John 6: 35, 38, 40