This chart shows the stock market activity leading up to the 1930’s crash in black. Then in red it shows the current stock market activity for about the last year and a half. They mirror each other! This is shocking to me. Take it for what you will, I know what I’m going to do.
Imagine that it is late August, and the storm clouds have been hanging around for days.
The wind has been blowing, giving you the indication – this storm is going to be a Category 5 hurricane. Truly one for the record books.
Are you prepared?
And then the rain drops begin.
But bad weather is a disaster that is “in your face”. You can’t escape it.
However, the disaster that is (now) looming (over) all of America is (a)subtle one. And will have far-reaching consequences for those that don’t prepare. Renown(ed) technical analyst Tom DeMark has discovered that the market activity prior to the 1929 Stock Market crash is incredibly similar to the Stock Market of today.
His calculations suggest that the market will crash on or around 14 January 2014. And this is one storm you can’t fully prepare for, but you can take some action.
His calculations are not the only ones out there.
Stan Harley, a former Navy pilot and author of the Harley Market Letter, figures that January 10th will mark the top of the market, before it plunges into darkness.
Ed Carlson, the current living expert on the works of the late George Lindsay, has calculated the first half of January is the likely drop date.
For years, the signs have been there like rain drops hitting a tin roof. The Baltic Dry Index (BDI) has been abysmally low. Unemployment and inflation numbers have been massaged and reworked to tell the American taxpayers lie after lie. Stock prices have been grossly inflated without any form of justification, and companies have been buying their own stock in order to prop up share prices.
But the media and stock traders have provided only soft breezes of easy money and good times ahead.
All they’ve done is made this storm possibly the worst one in American history. On a tornado scale, this promises to be an 8 out of 5, an 11 out of a 10 scale.
Financially – it will be hell on earth.
There are only a few possibilities how this will play out.
- Nothing will happen
- A collapse greater than the 1929 collapse
- Somewhere in the middle
Assuming the worst, as is the best option for prepping for disaster – the threats that the American people face are daunting, but livable. After all, our grandparents and parents lived through it. But it was a kinder generation – one that had God taught in the schools and human decency was the rule, not the exception.
What is the worst-case scenario?
- Civil unrest and riots (remember when the SNAP cards went offline?)
- Martial Law to quell the riots
- FEMA camps for the homeless (don’t laugh – there is precedence).
While it’s great to theorize the absolute worst, the worst is not necessarily possible, but it is plausible. After the 1987 crash, “circuit breakers” were placed on the Dow Jones trading activity to prevent another 1929/1987 crash. These breakers force all trading to be suspended along the following parameters:
- A 10% drop before 2:00 pm EST would cause the market to stop for one hour. Between 2:00 to 2:30 pm and the trading would stop for 30 minutes. Between 2:30 and 4:00, no trading will stop.
- A 20% drop before 1:00 pm EST and the market would be closed for 2 hours. If it happens between 1:00 to 2:00 pm, the trading stops for 1 hour. All trading would stop for the day if it happens after 2:00 pm
- A 30% drop, which would put the DJIA at just above 11,000 from 15,800, would shut the market for the day, regardless of the time.
As a general rule, anytime you see a boat taking on water – it’s generally a great idea to avoid getting on, or at best, make a bee line off the boat. And that’s what investors will do – abandon the ship to cut their losses and come back another day to invest.
The problem that most people aren’t prepared for is a long and protracted collapse of the stock market. In the crashes before the breakers, the markets took a short and severe strike, severing prime values in a matter of hours. However, the breakers will provide many the opportunity to liquidate their portfolios and the crash may take days to complete, and not hours.
In short, if it starts on a Monday, the Dow could hit about 2,500 in as little as 5 days. And that’s with all the brakes applied.
A word of advice to the Prepping Community: When you hear that the circuit breakers have been applied for the day – get your money out of the bank, except for those bills you need to pay within the next day or so. Having cash on hand will help prevent being caught in a bank run or being out of cash on a bank holiday. You can always (re)deposit the money if the market does a correction.
Whatever you do, plan now so you are acting with common sense and purpose. Everyone else will be reacting like a cornered animal.
And that’s what makes us Preppers.