From Crystal Ball thread--
Msg#: 982
From: larry1 (Larry Haimsohn)
To: ALL
Date Posted: February 17, 2001 at 01:50:45
Subject: The Turning Point-My Take
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Feb 26th 2001 will forever go down in history as one of the worst panic days in the history of the of the United States.
For what it's worth,two of the biggest panics we have ever had have bottomed on a Tuesday, Oct 29th 1929 and Oct 20th 1987. The panic in 1987 had it's entire panic on Monday Oct 19th 1987. It made an insignificant lower low on Tuesday the 20th.
In both cases the previous Monday a week earlier had made a new low, beneath the low of the previous decline. Then the market rallied for exactly one day. The next day it took out Mondays low and the rest is history.
To follow something similiar, we would trade below the S&P Cash
1254 on Tuesday the 20th. We would then rally into Wednesday the
21st. Thursday would bring with it new lows, and the beginning of the panic. It may just be a very bad day, or it could be a one hell of a bad day. Friday would be worse. Monday, well that's altogether another story. I believe that if we don't go down 20% that day, we will be within a hair of it. In 1987 we were down22% on that Monday, and in 1929 the final day, Tuesday was down 18.6% at it's worst level.
Remember that they close down the market at 20% down, as measured by the previous days close on the DOW. I will repost what I believe to be the rules of the exchange, as there is also a potential for a temporary close at down 10% depending on when it happens. If someone else can post the rules, if they can be found on some internet page, that would be wonderful. If not, I will post what I am almost positive to be the exact rules governing closings of the market.
You will definitely want to try to sell your puts before they close the market down 20%. The last 3% to 5% could happen very quick.
In all likelyhood we will have a day or two of rally. In 1929, we recovered 44% in 2 days of the prior two weeks decline, and in 1987 we recovered 35% of the previous 2 weeks decline the next day, Wednesday Oct 21st. In both cases the market came right back down. In 1929 it made a lower low by 8% on Nov 13th, and in 1987, Monday Oct 26th had almost retraced the entire rally, or close to 72% of it. There will be another chance to get out of your puts, although at perhaps a worse level than on the 26th or maybe on the morning of Feb 27th if it opens lower then.
I do expect a retest or lower low on or about March 5th or 6th.
There was a prior post that I did which had a series of hits which were as good a series of hits that one could ever imagine.
They were calculated from the top of the market on Sept 3rd 1929.
Take the numbers 55,56,57,58,59,60,and 61 square them, and assuming that the result was a number of weeks, therefore multiplying it by 7 to get the exact number of days. The result
was as follows:
55sqx7= Aug 25 1987 the exact day of the top in 1987 before the crash
56sqx7= Oct 10th 1989 the exact day of the high in 1989 before the mini-crash
57sqx7=Dec 10th 1991 one day before the low of an absolute explosion that carried the DOW straight up for about 5 weeks
58sqx7= Feb 22nd 1994 a couple of trading days off of the very close retest of the Jan 31st high of the year which precedd the largest decline in 1994
59sqx7=May 21 1996 two days before May 23rd, the top of the market in 1996 before the largest decline in that year
60sqx7= Sept 1st 1998 the exact low of the DOW in the largest decline that year
61sqx7=My controversial date of Dec 26th 2000, It was two closing days from the low of Dec 21st 2000, the lowest low of the year in the S&P 500, and also two closing days from the highest close on the DOW Jones Composite since May13th 1999.
Boy they could have made it easier. Was it a high or a low?
IT WAS A HIGH!!!! IT WAS A HIGH!!!! IT WAS NOT MARKING A LOW!!
WE WILL MAKE LOWER LOWS IN THIS PANIC!!!
That was just in case you were uncertain about whether it was a high or a low, as I am certain it WAS THE HIGH!!!!!!!!!!
That series is really incredible. When Peter Eliades saw my first post on this, he immediately pointed out the fact that there were previous large turns that it also hit. My point here is that although some of the dates were direct hits, others were off by a day or two.
That doesn't necessarily mean the 26th of Feb will be off by a day or so, it means that it could be. It means be careful. One extra day down in a panic can mean a lot. I would not think the panic low would come in after Tuesday the 27th. |
