A Stock Market Crash on Friday, August 5, 2011 Prediction ~ The Risk Averse Alert

Thursday, August 04, 2011

A Stock Market Crash on Friday, August 5, 2011 Prediction

Long-time readers will recall my due diligence in deference to unprecedented damage done to the stock market in 2008. Here, it was a wake up alarm. Everywhere else, game over, same game on.

Thus, perfect setup, then, not only for a contrarian, but a believer in the market's reversal of fortune, a la, say, December 1987. Now, of course, to a bear undeniable. In fact, it appears the most wicked part of the start of Mr. Bear Undeniable might be poised to unfold in a crash tomorrow.

Having done a fine job all week keeping the lid on Europe's implosion, odds are folks will be loath with angst to be exposed over the weekend to whatever uncertain intrigues are likely there (none of them, so far, looking promising).

SPX 5-min

Welcome to your technical nightmare, my poor bullish friend.

Behold, sell-side relative strength confirmation all day long as the market dove lower, with its closing crescendo being a coup de grace ... just like on Tuesday.

Now look how the market opened on Wednesday. Gulp.

The fact she sunk below her prospective, declining Elliott Wave channel's lower trend line going into today's close is disaster! No channel bottom in sight.

We rather vividly see, too, (via the S&P 500's relative strength) just how extremely imbalanced the situation between buyers and seller has become at certain points during the market's decline over the past ten days. In fact, the worst of this imbalance registered ... drum roll ... last Friday at the open. Double gulp.

Do you think the imploding euro-zone might have been an open secret whose prospective, weekend angst drove last Friday's selling? I know. Sick!

Yet the most damning matter of circumstance right now is what relative balance was maintained between buyers and sellers over the course of the market's sinking this week. No capitulation in the least! No panic either. That, however, looks next.

There is an extraordinary likelihood the market will crash on Friday, August 5, 2011. This from the market's technical state: presented above, as well as that suite of other measures I use to judge the psychological state of money's attraction to the riskiest financial asset of all (among those possessing a direct claim on a business' production).

The fact of the matter is money with staying power is not at all to attracted to stocks. This was shown true every step higher the market took from March '09 bottom to May 1st, 2011 top.

Finally, thus far in known history every Ponzi scheme (like ours now, built by King Ponzi, Alan Greenspan) inevitably reaches its appointed moment when it is time to pay the fiddler. Not one escaped destiny in collapse. Now, if what Congress just did in surrendering its power was not a most foreboding signal likely to stand the test of time, then there never was such a thing as history, nor decisive moments from which the world forever changes.

Fast Money
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