Get Ready: The Next Wave Down In The Great Crash

I have an important update regarding how far we could see the market drop in the short days and weeks ahead…

I’ve been warning for months that it looks like this bubble may finally be peaking.

I’ve warned that it’s best to get out of stocks a little early rather than a bit late. That’s because, when bubbles finally break, they burst rapidly – as much as 40% in the first few months. It can make markets very volatile, up and down, hence harder to predict and adjust to. If this is indeed the end, we’ve only taken the first step down a long ladder.

In retrospect, the odds keep going up that we saw a major long-term top on May 19.

The first warning sign was that, as stocks made little progress from late December into May, we saw a series of major tops around the world. And that to me is no small matter.

Dow Transports peaked in late November and are down 20% since.

Dow Utilities peaked in late January and are down 18%.

The German DAX and British FTSE both peaked in April and are down 24% and 19%, respectively.

The Dow and S&P 500 appear to have peaked in late May. The Dow’s down 16% since then.

Then in June came China’s Shanghai Composite index – one of the leading dominoes to fall – and it’s crashed 42%. The Russell 2000 index also peaked in June and is down a little more than 12%.

And finally, our Nasdaq, which peaked in late July, is recently down 21%.

Four of those are undeniably in bear territory. The Shanghai, DAX, Nasdaq and Dow Transports have crossed that 20% threshold that literally defines a bear market. A drop like that only raises the chances that a bubble is finally over. But thus far technical indicators only show that the Shanghai and DAX have peaked for good.

And all of this is just the first warning sign…

The second sign came when stocks broke out of the narrow and very bullish four-year S&P 500 Channel on August 21. In the past, I’d told our readers that would be the first clear breaking point. Only that would begin to signal a major top and at least a 20% correction.