The Coming Crash

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The stars are aligning for a pretty serious pullback in the US Equities Market.

The chart uses my two favorite indicators; RSI and MACD .

I've gone through and marked historical correlations on the chart for prior crashes for both indicators.

RSI going above 70; signals overvalued
RSI going below 30; signals underbought

MACD Converging (Red)
MACD Diverging (Green)

You'll see both of these correlate quite nicely with the two previous crashes.


I project a between a 30-40 percent pull back spanning nearly two years.

I've added a possible short position with a fairly tight tolerance for a good ratio.

I'll keep the chart updated in case we're looking at a false-top; given present valuations and P/E ratios I don't think we are.
People tend to think this time is different, but chance is good it isn't. Today's Fed minutes is very telling. The Fed basically said that they are not confident and things are not that rosy. The fact that they cannot raise rate as market had expected invalidated at least part of the 6-year bull run. So be careful is ALL I can say. There is no need to forecast where market is heading - get out if the main trend line breaks and/or price dips below 10 month MA, otherwise stay in the market.
pete.j.jensen CosmicDust
Better early than late ; - ) I'll have to sharpen up on my double-speak and check out the Fed minutes. Thanks for your comments.
pete.j.jensen pete.j.jensen
not yet, sorry

Nice work with your chart. I think we agree on the fact that it *will* drop and the rough magnitude of the drop once it does. We're on borrowed time. 700 days 30-40% drop; I'll start the clock counting. ; - )
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