Big down day Thursday, October 4th. Stocks may have topped on our most recent Phi mate turn date, which was scheduled for October 2nd, but looks to have actually occurred a day later on October 3rd. Stocks plunged Thursday, then recovered a portion of the decline later in the day, but ended down. The reason financial news networks gave for the decline was that long-term interest rates rose, and further they spun the rise in interest rates as a good event, an indication of a robust economy. Nonsense. The Fed's Quantitative tightening policy of selling $80 billion of securities every month, a large chunk long term, has flooded the market with supply, causing bond prices to drop and required rates of return to rise. This economy is not rip roaring, the stock market is topping, and a major bear market and decline is at high risk of beginning soon, with a recession to follow.
There are 19 Hindenburg Omen observations on the clock, an extraordinary quantity associated with an official H.O. potential stock market crash signal. At best, this indicator is telling us the stock market is in a fragile condition. At worst, a plunge is coming. Bearish divergences are all over the place as shown in last weekend's report.
Techs really took it on the chin Thursday, and all our key indicators for the NASDAQ 100 generated New Sell signals Thursday. Our Blue Chip Purchasing Power Indicator and Demand Power / Supply Pressure Indicator generated new Sell signals Thursday. Small caps got hit hard. New NYSE 52 Week Lows skyrocketed to 426. Over 70 is considered to be high. The stock market currently sits at its greatest risk of a crash since September 2008. This does not mean a crash is certain, but many of the conditions that typically precede crashes are in place right now.
