Home > shorter work time > By all indications this is the end of the world (market) as we know it…

By all indications this is the end of the world (market) as we know it…

November 22, 2008 Leave a comment Go to comments

When the market closed on Thursday the Standard and Poor 500 index announced to anyone savvy enough to understand that the era of stock markets had drawn to a close.

And, not surprisingly, no one marked that moment.

Certainly the major news outlets covered what was a pretty horrendous day, but there is something left unsaid, something so entirely foreboding, so dire about the closing number – 752 – it is quite the fear whose name must not be spoken: Double Top.

This is the largest such formation ever seen in the history of market.

Just to give you an idea of the scale what just occurred on Thursday: the completion of the S&P double top is akin to the opening of the Seven Seals.

Stockcharts.com defines the double top this way:

The double top is a major reversal pattern that forms after an extended uptrend. As its name implies, the pattern is made up of two consecutive peaks that are roughly equal, with a moderate trough in-between.

An innocuous enough definition, one might not understand how this applies to the closing chart of the S&P 500 on Thursday. So we will show you what it looks like when the chart of the S&P 500 is displayed for the years 1929 to 2008:

sp500-1929-2008

Still not impressed?

What you are seeing is the performance of the S&P for the last 80 years. As you will note, somewhere around the mid-1980s the chart start going parabolic – i.e., begins to climb at an unsustainable rate. By the time of the Clinton Administration – about 1995 – the rate of climb became even more unsustainable.

When the market crashed starting in 2000, it fell for 3 years before reaching the bottom.

But, thanks to Washington, and the beginning of the war against Iraq, the market once again rose to the previous 2000 peak by 2007.

This is where the double top finally made its appearance, and, from there, fell to complete itself finally on last Thursday.

Still not so impressive, until you realize a double top is what is known as a major reversal pattern, which is any chart pattern which signals a reversal of the direction of the market.

Since World War II the overall trend of the market has been up.

This pattern says the overall trend will now be down.

We bet you want to know how far down, since all your retirement is invested in the market through personal saving, investments, 401(k)s and 403(b)s, and, state and corporate pension funds.

How far down pretty much determines when, and under what conditions, you may retire in the near or less near future.

Well, to put it bluntly, the chart says don’t bet on any retirement.

It also says: Don’t bet on any mutual funds, banks, or any other financial instruments.

Don’t bet on insurance companies, or, annuities.

Don’t bet on home equity, or, savings.

A double top has clear predictions about what the future holds for the S&P. It may get it wrong this time, but you would be advised not to bet on that either.

Stockcharts has this to say about how bad the current market meltdown will get in all probability:

The distance from support break to peak can be subtracted from the support break for a price target. This would infer that the bigger the formation is, the larger the potential decline.

Support for our chart was in the area of 800. On Thursday, November 20, 2008, the S&P closed below 755 – thus breaking its support and closing at a level not seen since 1997.  The S&P had reached about 1550 at it peak.

Following the method used in the Stockchart quote, we subtract the support, 800, from the peak, 1550, and arrive at the likely target for the S&P in the coming months: 800 minus 750 equals 50.

The last time the S&P was near 50 was about the same time Harry S. Truman was putting his signature to National Security COuncil Memorandum 68.

The S&P chart is essentially saying there has been no real expansion of economic activity since then.It was all smoke and mirrors, as the market will likely demonstrate for us in the coming months.

The S&P chart is essentially saying there will no stock market within a matter of months. It will be gone, and all the capital market connected to it will be gone as well.

Nothing will likely prevent this fall.

We will only be able to avoid the horrendous consequences, but that will require a very aggressive reduction of working hours, and the virtual elimination of government.

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  1. Grillge
    September 25, 2012 at 5:30 am

    Hello Jehu, I’m glad to see I’m not the only one who has noticed this, even though there has been a considerable up trend this doesn’t undo the double top , the %100 mark was broken which is conformation of a %200 re-tracement. I have seen this happen in other stocks and they always go the %200 eventually. There are other indexes that have done the same eg: FTSE ,German index and the India BSE30 index.If these 3 index go the full %200 they will go off the bottom of the chart. The Dow Jones looks like it will produce a double top as well. The US government will do it’s best to manipulate the double top as they have done with the S&P500. There will be a major event of some kind for all these Indexes to crash.

    • September 25, 2012 at 8:57 pm

      Yes. It is a very interesting formation. Do you think it has a window to confirm the formation? Have you read this piece: http://www.businessinsider.com/raoul-pal-the-end-game-2012-6?op=1

      • Grillge
        September 26, 2012 at 6:14 am

        Yes I just read Raoul Pal page and those charts are just confirming the other charts that I pointed out plus the S&P500. For the markets to go off the bottom of the chart this means everyone will be pulling there money out of the markets ,and there will have to be more than a financial collapse . I think that a nuclear war will break out , and it wont be like Japan , it will be full scale. Nuclear war is the only sane answer. These chart formations are a first in history , never before have double tops been produced that will fall off the bottom of the chart when they retract the %200. I trust what the charts are saying but I hope to hell they are wrong. Sometime I wish I was oblivious to all of this ,but at least I will be prepared and have a plan for when the shit does hit the fan.

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