I can now provide a graph from this last week of market moves that perfectly illustrates what I was predicting for the rough ride ahead in “Something Wicked This Way Comes!“
I’m anticipating this coming week will be horrendous. That kind of extreme bouncing is nothing but the rapids right before the lip of the waterfall. There are likely to be more rallies that won’t be much more than huge rapids to go over in the journey, because we’re heading down a chute of waterfalls now.
While it took two more weeks to show up than what I anticipated, this is now the action I was saying was right around the corner. Think of a river plunging downward through a steep section of canyon, such as in the photo above. There are major rapids the water crests over that plunge further on the downside, often with short waterfalls along the way. If you’re a white-water rafter, this kind of chute is the most perilous class-5 rapids you can navigate. The only thing worse than this is straight over a major falls.
In stock market terms, that is exactly the action we experienced all of this week. It looks like this:
The last short rally appears to have ended on October 28. Since then, the heavy chop has begun as the river began its steep decent, and the market has trended sharply downward (through the chute) with major swings on roughly alternate days, as I described in that article.
That is the way it will be for people who have chosen to ride out the stock market in this perilous plunge, instead of portaging around this section of the canyon. Then one day, when something in the financial system breaks under the Fed’s severe tightening and all the other global problems, they will go over the big one. And then maybe another even bigger one. And, finally, if they survive, there will be a nice calm pond at the bottom.
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