Remember what I said about this week closing hard down

In my ‘do or die post’ a few days ago I said we needed to close this week HARD DOWN for the stock market crash scenario to stay alive.

Obviously the week is not even close to being over yet.  But from reviewing my charts tonight I can see that we have as of today started to initiate a 1987 style repeat.  I was looking for a very specific indicator to give me a turn signal and it did give one today that maps the initiation of the 1987 experience.

IF my turn signal is correct then we should see going forward an initial semi slow (but persistent) cascade down perhaps with one or two big up days and then a total collapse after that and I do mean TOTAL collapse.

The risk with this scenario is the lack of volume on the downside we have seen in the last two days.  A couple days ago there was a bearish engulfing candle that bearishly engulfed the three doji’s that existed before that.  The problem is that the downside volume is not robust enough.

That lack of volume can seriously screw up this crash signal and could warn of a very sharp upside reversal perhaps to 1150 or 1170.  Sometimes it takes more momentum for volume to start kicking in to the downside, so maybe that happens later this week.

If I am correct then we are so far already 2 days into maybe a 11 to 15 day crash sequence.  But again, this is something that needs to be observed day by day for confirmation.

Updates to follow…

Posted in Index Trading, SP500
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