4 Our 26 September report titled “Ominous shades of 1987” highlighted the similar Head and Shoulders toppatterns in the Dow Jones Industrials index from then, just before the famous crash, and now. You can see
that report here.
4 On 30 September we issued an “Orange alert for stocks” as the Dow Industrials index re-tested the neckline of
its head and shoulders top pattern again and failed. You can see that report here.
4 With the US stock market selling off aggressively on 11 October, we now issue a RED ALERT. The fall was
broad-based and the Traders Index (TRIN) showed intense selling pressure as the market moved to the lows
of the day. The VIX index, a barometer of nervousness, has been making a series of higher lows since August.
4 The key pivot points remain 17,992 in the Dow Industrials index and 2,116 in the S&P 500 ®. As long as those
levels remain intact, the bulls still have a slight hope. But should those levels break and the markets close
below (which now seems more likely), it would be a clear sign that the bears have taken over and are starting
to feast. The possibility of a severe fall in the stock market is now very high.
4 The drop in EUR-USD adds confidence to our Elliott Wave triangle analysis, suggesting that a move towards
parity is underway.