Countdown to a crash
By Joseph Granville
The Granville Market Letter
"I
want to quickly sketch in here the outlines of the big picture an clearly
explain why I am bearish and looking for a continuation of the current downtrend.
We saw the Spring blowoff which I had labeled the summer of 1929. That culminated
on the May 13th Dow high of 11107.19. That was the key technical reference
point for what followed. Following the May-June decline the Dow rallied
and broke out above the May 13th level and reached a new Dow high at 11209.84
on July 16th. But it had become increasingly apparent that on the July rally
the army was marching to a different drummer, no longer following the generals.
Most stocks were going lower as proven by the high/low indicator and the
advance/decline line.
On
the July 16th Dow high there was a significant series of upside non-confirmations
seen in the OBV numbers, the number of new highs, and the advance/decline
line. Technically, there was no question about itthe July Dow runup had
recorded a significant bull trap. That signaled that a significant decline
lies ahead.
It
is clear in these letters that I am not looking for an ordinary decline.
Not only are my current numbers signaling something very important on the
downside to take place between now and October, but it is the convergence
with history that is now of the greatest concern.
What
I am watching for here is a near-term break in the CLX to -20 or lower.
That would not only give us a major downward zig-zag as was done on October
3, 1929, but would put it in position for two such low readings back-to-back
and that would remove all doubts as to where we now stand in the countdown
to a crash.
What Should a New Subscriber Do?
Maintain
defensive posture. Take more money off the table. Go into the money market.
(Caution: Be sure the securities held in your money market fund are all
short-term governments). Buy T-bills. Select indicated short sales. Buy
put options where indicated. Hold the indicated low-priced stocks. Hold
the oils but respect the stop loss levels here. Resume buying of recommended
gold stocks."
Editor's
Note: The Granville Market Letter
has been published continuously for over 36 years by Joseph Granville, the
most celebrated individual ever to hit Wall Street. The letter covers stocks,
options and gold. Author of books that have become "classics"
in every sense of the word. Granville foresees a crash in 1999. In these
highly volatile market days we strongly urge Bull & Bear readers to
give Karen Granville a call at 1-800-876-5388 and inquire about rates for
the Daily Fax Service. A Special Trial of the next 4 weekly issues of The
Granville Market Letter is available for $31. Sorry, no free samples. The
Granville Market Letter, P.O. Drawer 413006, Kansas City, MO 64141. 1 year,
46 issues, $250.
