8 Mar Stock Market Crash of 2008

STOCK MARKET CRASH OF 2008
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SPX did not manage to hold above 1300, closed at 1290. Well, you would know what would happen to Asia market next week. All Asia markets would gap down, and test their January low. Possibly 5-10% drop in a day, especially Hong Kong and Singapore markets.

Then overnight, US indices would be dragged lower, SPX would break 1270, and DJ firmly below 12000 by Monday close.

As for Oil, my forecast the top is below 107. Oil would grind lower in coming days to test 92 again. At least 106 is the high for this year. with a lot of consolidation in coming months between 78 and 90.

Gold would probably take a well deserved rest in coming weeks, cannot rule out a sudden burst of strength downwards towards a test of 180 days moving average at 760.
Though 850-900 is more likely.

March is a month of profit taking and consolidation.

With a pending 100bp cut on 18 March, USD is really hopeless.

If you believe that S&P would break its January low at 1270, pls click on the Googles Ads on the right.

If you read Quantum Physics, you know we live in a parallel Universe. In this Universe of ours, we are in a Bear Market. While in another universe, SPX is testing 1700 now.

God has given us clues of what is coming. E.g. the recent signs of Red Moon, EarthQuake, falling stars, etc. Also the most active Volcano on earth, in Hawaii, spewed lava today once again. Gunman running amock in schools, shops. Bomb blast on Times Square.

Did you see the movie "10,000 BC". Well, that is how God tells us Dow Jones is heading towards 10,000.
Remember the movie "1408" when SPX was hovering above 1500 ?
Also the movie "Fanatastic Four, the Silver Surfer" ? Silver has outperformed Gold.

At the end of the BEAR MARKET, Dow Jones would probably be at 9000, and S&P at 900.
It would take some time to play this out.

The SPX level of 1300 to 1400 is market way of saying Market is slowing down.
1200 to 1400 is recession for 2 Qtrs. (Fed fund rate at 3%)
1100 to 1200 is recession for 3 Qtrs. (Fed fund rate at 2%)
1000 to 1100 is recession for 4 Qtrs. (Fed fund rate at 1%)
900 is recession for 1 year or more. (Fed fund rate at 0.25%)

Guess what wold happen to US from 2009 onwards ?
Just look at Japan, a decade of going nowhere at negative interest rate. (Bank pays consumers to take loans). Massive nationalisation of banks.

US would enter into a decade of Deflation. By the end of 2008, all Central Banks would begin cutting interest rates. ECB would start to cut when Fed is at 0.25%. BoJ would be cut to 0.25%, and then begin another decade of going nowhere. China would slow down 3 months after the Olympics is over. Hong Kong would depeg from USD sometime in the 3rd Qtr this year.

Ben Bernanke would be a one term FED Chairman. (so sad, Alan Greenspan was smart enough to quit before his device catch up with him).

You can rest assured that both Republican and Democrats are in on this recession. They would prefer a recession starting in the Bush last yr, and market recover in 2011-2012, the next President (whether a Democrat or Republican) can seek a second term.

Hence do not expect much from the administration. 150billion is simply not enough stimulus. Bernanke is obvisouly frustrated and he decided to go out of the way to advice Banks to forgive loans, which should be the job of the Treasury.

All Ben Bernanke can do is to cut rate to 0.25%. USD would probably be at 1.8000 Euro and USDX at 60 by the end of 2009. By then USD would cease to be the World Reserve Currency, as all Central Banks hold little of it in their reserves.

Hank Pauslon would probably leave office before his term is up.

In 2nd Qtr, you can also see some consolidations among the Financial Institutions. Citigroup probably would be bought over, Meryll Lynch, Goldman Sachs, Bear Sterns, Morgan Stanly would consolidate into lesser entities.

SocGen would be be gobbled by Credit Agricole and BNP. UBS and Credit Suisse would merge.

Imagine you see the AMBAC Chairman talking on national TV, a white haired fat old gentleman slouching on the chair, yaking capital injection into his company. You know all these Bond Insurers time is up, no matter what.

Wall Street needs a new injection of Young, Energetic, Visionary, Honest people to survive the coming crisis.


The world would just muddle along. Emerging Economies would thrive. Inflation would be a fading concern, when Deflation kicks in.
All the goods from China, India would find lesser buyers. All prime properties prices would plunge. Bill Gates would go down 5 notches on Forbes ranking.

Those proud owners of GOOG, AAPL would find 3 years of their lifetime wasted, when stocks return to their prices 3 years ago.
(In Einstein theory of Relativity, when you travel at speed of light, time comes to a standstill. In Aragon theory of market plunge, your monies went nowhere for 3 years. e.g. GOOG going to 150 USD (peak 750 USD). AAPL to 50 USD (peak 200 USD).

In summary, we are just at the beginning of the multiple years recession, and hence bear market.

In Elliot Wave terms, we just finished the 5th wave of the 5th of the 5th,..., and we are into the correction wave, if there is another Bull, probably not in our life time.

These forecasts are made based on what is known. If a Black Swan event happen, then the plunge would accelerate. What may be a Black Swan event ? e.g.

(a) a football field size meteorite hitting Earth,
(b) Hawaii volvanoe erupt and slide into the Pacific Ocean, triggering a Mega Tsunamis overwhelming the coastal cities of Western USA.
(c) Bird flu morph into a human invasive variant causing a Pandemic
(d) the long awaited Andreas fault eruption
(e) war, China in Taiwan straits offensive
(f) Russia, US confrontation in Poland

Nonetheless we can trade tactically to make monies, once we know where the market is going.

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Meanwhile, I am spending more time exercising, jogging, flyfishing, trekking. Health is the ultimate Wealth.

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