Dow Jones S&P Stock Market Crash 2008: Is Friday 10th The Final Bottom?

Dow Jones & S&P 500 Stock Market Crash 2008: it is virtually certain that a major bottom has just been made in the US stock markets yesterday, Friday 10th October, and we can expect a very strong and even dramatic rebound for Wall Street stocks over the coming week. This is because (a) the stock market is impacting a number of important time cycles on this day, and (b) the wild up and down intra-day action of Friday 10th gives strong evidence of a bottom for the time being. However, although the market bounce in the coming weeks may appear strong and will temporarily lift the spirits of terrified investors, it will be short-lived and the US stock markets will re-commence the crash, will almost certainly revisit the lows made on Friday 10th October, penetrate them, and then trade much lower before any real chance of a bottom to the selloff can be found in at least the short-term.

The time cycles are the fact that it is an exact one-year anniversary to the day to the all-time high on both Dow Jones and S&P, which was made on October 11th 2007, as well as an exact 6-year cycle to the 2002 low of October 10th  (which had a causative effect from Gann analysis to create the October 11th 2007 high in the first place, as did the October 1987 Crash which was an exact 20-year cycle to the same 2007 high). There are a number of other time cycles impacting over this daily time horizon to corroborate the picture, but the two main cycles likely to cause stocks to rally are those just stated.

However, the levels reached on the Dow Jones index yesterday of 7773.71 and on the S&P500 of 839.80 are almost certainly NOT the final bottom, but just a temporary pause. In July, when the Dow Jones bounced off of the 10,709 level, which was the 25% level down from the all-time high of 14,279.96, skirted with it for several months, and then finally broke through definitively in late September, it was targeting the 50% level down from the same all-time high, namely, 7139.5. When it broke straight through the 33.33% level from the high without so much as a pause, the Dow Jones index was again confirming that it was targeting the same 50% level. The equivalent 50% target level on the S&P500 is 788.045. However, these have yet to be reached in the current run and, with a combination of major time cycles impacting on October 10th, that is now unlikely to be achieved in this current precipitous leg of the stock market crash.

It should also be born in mind that during the 1929 and 1987 stock market crashes, the Dow sold off by 50.59% and 63.12% to the first major low in a space of a mere two months and four months respectively. However, the present bear market has lasted exactly one full year from the all-time high, and has not even achieved the 50% target as of yet. Hence, this too suggests that the markets are not yet done, but have more bearish energy left to display.

The most likely scenario is that both the Dow and the S&P 500 stock indices will rally strongly over the next two to three weeks. Previous upside corrections to the bear market over the past year have lasted between seven to eight weeks in length. However, given the undisguised force of this selloff, there is no need to think that the correction will last that long. Yes, it is just about conceivable that the correction might turn out to be more protracted and drag out for several months, but under current conditions, i.e. when a trend is powerfully underway, corrections are generally very short indeed. Hence, the two to three week time frame is favored.

Targets on the Dow Jones during this upside rebound are 9,717 and 10,364; the 25% and 33.33% projections from the Friday 10th low of 7773.71: the S&P 500 equivalent targets are 1049.75 and 1119.705. At any rate, the rally on the Dow Jones, which is PURELY corrective in nature, could well bounce as high as the 10,364 to 10,700 region, but will most likely stall at those levels (if they can be reached in the first place), and the stock market crash of 2008 will then resume once more in earnest!

As stated, we are then looking for 7139.5 on the Dow Jones index and 788.045 on the S&P. However, that does not look as if it will be the end of the story. The markets are so weak that it is quite likely that the bear market will resume to levels even below that. Some of the analysis that I have, such as Elliott Wave counts, strongly suggest this. Moreover, in contrast to the previous two stock market crashes, this one has proved to be much longer and therefore sustained in its nature. Let us not forget that in the stock market crash of 1929, the Dow Jones collapsed by 50% over the first two months but then collapsed by a horrendous 90% over a period of thirty three months, which lead to the Great Depression. The market never returned to its pre-crash level until the mid 1950’s!

It would be nice to hope that a similar scenario does not repeat here, but things are not looking optimistic for the markets at all even if the next fortnight or so may give the illusion that “order has been restored”. Some charts already show price targets in the 2000-4000 region, which would be an economic disaster for the whole of the Western world should it materialize. Personally, I prefer to take market analysis in a step-by-step manner and not be too dramatic, since the roadside is littered by the numerous corpses of technical analysts with dramatic predictions that never came true. For my part, January 24th 2008 was the FIRST TIME in my entire involvement with the markets going back to 19th October 1987 (Yes, Black Monday was my very first day at work!) that I ever called a serious “bear market” in the stock markets. (See the video links below).

Sadly, it looks as if that prediction was horribly correct!

Stock Market Crash 2008 Predicted In January

Stock Market Crash 2008 Predicted (Part 2)