I want to start today’s discussion by updating our current view on world stock markets as well as the potential catalyst we think might play the most important roll in the coming crash.
Then we‘ll talk a little bit about the nature of important market turning points and how we manage our own emotions during periods of “high emotion.”
The BAM Model is currently predicting a stock market crash of approximately 22% during the month of October. Unfortunately, after the initial crash, we’re also expecting several mini-crashes during the coming months as the SPX moves back down toward our long-standing target at the SPX 529 level.
Why are we sharing this information with non paying subscribers?
Simple. We want to help people.
We also know that once we save/make you money that you’ll become a life-long enthusiast of behavioral analysis and a paying subscriber to one of our BAM Investor products.
The current stock market TOP (as all important turning points) has generated a lot of questions from followers, most of which are fairly typical. The questions range from earnings related to more pointed insults–telling us things I can’t repeat here–but the main take-away is to understand that these are normal reactions, all of which we’ve witnessed before at major turning points.
This crash, as all crashes, will be based on a surprise factor and for that reason, it’s more difficult to answer questions based on fundamentals than it is to simply say that our model has been very accurate in forecasting both market melt-ups–like the ones we identified in wheat, gold and crude oil– as well as crashes–like the ones we forecast in the stock market and crude oil during 2008.
Our model is a little mysterious (even to us) in that we’re never sure what the catalyst might be for a big market move.
All we can be certain of is that our model is calling for the move and that, historically, the model has made many unexpected market calls that were very profitable. In other words, we listen to the model even if we can’t figure out the reason it’s telling us what it’s telling us and we NEVER attempt to outsmart the model.
We’ve been fairly accurate over the years in analyzing intra-market relationship as a method for focusing on the most likely catalysts for large market moves. In other words, if one market moves rapidly is it likely to create a fast-market move in another market.
The current crash, assuming it follows our script here, will most likely be tied to the fact that so many large funds have placed trades originating through a US Dollar-based Carry Trade.
What that implies, is that once the US dollar Index starts to rally sharply–and we think that will occur this week–the simple “mechanical” unwinding of these trades will be sufficient to cause bull markets to collapse while simultaneously causing bear markets to sky-rocket. By “mechanical” we simply mean that market participants need not want to buy or sell for fundamental or personal preference reasons, they’ll eventually be forced to buy or sell during the unwinding phase.
Simply stated, we believe the pressure being applied to large hedge fund operators to generate market-beating results, has placed world markets in a precarious position of trading off the exact same catalyst which in turn creates a situation whereby markets– no matter how apparently diverse– are in reality joined at the hip.
Please remember that it’s typical for BAM Model followers to feel “wrong” at major turning points, after all most other services rely on trend following techniques as opposed to the market timing and contrarian investing discipline that our model forces us to follow.
Believe me, it’s difficult for even the most seasoned hedge fund operators to follow our work blindly so we certainly expect individuals to severely doubt us at important turning points. But if you stick with us long enough, your comfort level will increase with each correct market timing call the model makes.
As a rule, if you’re uncomfortable to the point of losing sleep or thinking about our forecasts too much during the day, you’re probably gambling as opposed to investing. Traders and speculators may wish to gamble in a controlled manner but it’s never a good ideas for investors.
Also please remember that what we do here on this site is intended to simply provide a “peek behind the curtain” with respect to our own personal portfolio positions as well as the positions we’re sharing with institutional investors and hedge funds.
If you follow any of what we’re doing here on this site, please be aware that you’re doing so at your own risk. JG Savoldi, his family members and friends, are involved in trading ideas and portfolio positions mentioned on this website. In other words, we’re walking the talk here with respect to the BAM Model.
Thank you again for your interest in the BAM Model.
well. with Intel just reporting blow out earnings… JP Morgan, Goldman and Google on deck next, we might have to put that crash on hold for a few more earnings quarters.
Stock market crashes are the result of macro events–not company specific earnings. We’re sticking with our original call here.
you guys are confusing, your were saying a market crash within 2 to 5 months, now you are saying a 22% crash in october, well which one is it?
The two calls are both valid according to our work and should not be viewed as contradictory. We’re on record calling for a 22% crash during October and we’re also on record calling for a continued decline of 50% over the coming 5 months. Our long-standing S&P 500 Index target remains 529.
I have followed you on Twitter lately. For different reasons, your model predicts the same outcome as ETF Guide, which I subscribe to. After your model’s prediction comes true, I’ll want to invest in one of your products due to the more detailed information provided. I appreciate the Twitter trial. Thanks, Ray.
Is it the same guide which said ‘Why Dow 10,000 Will Remain Untouched For Years’
They just need to look out there and see it clearly.
http://finance.yahoo.com/news/Why-Dow-10000-Will-Remain-etfguide-3642016142.html?x=0&.v=1
Like Ray R, I too am interested in your advisory service. Since I don’t understand my risks in futures or wheat markets, I guess I must remain satisfied with stock and bond profits. I am interested in your product and have prepared my portfolio to take advantage of a downturn. That is, I’ve raised a considerable amount of cash. I will wait to see the stock market break key supports before jumping in. If we’re going to 529, there is plenty of money to be made.
During the 4 week trial, you have made several market crash predictions. I expect a major market correction too which is why I follow you. When “the crash” happens in October, I will be signing up for your service. Until then I continue to follow you on Twitter.
Just want to say thanks for the Twitter trial. It was pity we cannot take the recent calls on wheat here in Singapore.
I think the recent positive news only just pushes people to doubt themselves and reconsider if their actions were right or wrong. I have taken conservative short positions in the last two weeks only to see the the mkts go higher. Should I cut loss or wait it out? It is nail biting and so far I am placing my bets on you guys since I am also somewhat of a contrarian.
However, the positive technicals are just too hard to ignore! I am going to wait another week to see…
Once again thanks JG!
Ps. why do I not see many comments on your earlier posts??
I found your Twitter promotion to be fascinating. I think it was a radical idea and I think you ought to consider giving it some more time. You went out on a limb with a market timing call (crash this week) and I think you risked a lot. But if you’re right you may be throwing away an opportunity to get thousands of subscribers on board. A lot of people want this kind of real-time or every hour update who aren’t trading professional and I am fairly sure it would be worth $100/mo or so. In fact, you would probably get a lot more subscribers if you lowered the price to $25 and did a lot more direct (email) marketing.
I too greatly appreciated your Twitter campaign and hope you will consider bringing it back possibly just in the BAMInvestor version. Maybe post every couple hours (maybe less) or as needed for another trial period. No need to post what you are trading yourself, just more general stuff regarding the model. With investors bullishness off the charts currently there may be a big correction even without the dollar catalyst. Thanks again for using Twitter.
I am new to your post and am intrigued by your seemingly accurate past calls. Given that your current call ( 22% fall coming shortly) is based on “emotional inputs” to your model, have you ever seen the emotional inputs change causing you to reverse your call? What happens if the Fed.,in blowing this bubble, is successful in enticing the public to begin to actually believe in the rally and become buyers?
Waiting for the crash…
It looks like we will see DOW 10000 first
If your prediction is correct I will be seriously thinking about getting a subscriber.
Well, I think you have scored very few points with your Bearish forecast. Perhaps you got the sign wrong? I repeated your forecast on my website – an active chatboard, with over 2,000 members, mostly in the UK. Some think they can now use your forecasts as a contrary indicator. This can happen. But by aggressively spreading your forecast, and then being so markedly wrong over the last week, I think you have hurt your chances of attracting more subscribers. You can redeem yourselves, if the markets suddenly dive before month-end, which is certainly possible. But I do think you need to admit your forecast was too early, and say something about why you were wrong.
Since your model includes velocity as one of its many variables, does the farther away we get from a specific trigger date reduce the probability of such an event happening? Or does your model have a margin of error in terms of time?
The attractiveness of your modeling is that it would be able to provide a trigger date, withing reason of course, for a market condition change. If the timing accuracy becomes too variable, the model’s effectiveness also is reduced.
I am following your model with interest primarily because of what you are trying to model – human behavior and markets.
we still have half an October, let’s see if we are going to go down 20%
assuming Dow is at 10K, we will be looking at Dow 8K on Halloween …
It is all about the $. My analysis of thr $ Index indicates a fair chance that the INdex has completed its ABC ending with a diagonal 5th wave. It bounced slitely after making 2009 lows; but it will have to rise smartly to indicate the count has merit. The Es mini is in throes of completing a 5th wave diagonal to new recovery highs.
The problem with the analysis is that it needs confirmation – $ Index up definitively and the S&P dropping clearly.
Big problem – info today indicated that the Fed has been selling $ and buying foreign currencies.
October 16, 2009 (+-1 day) might become a very important day. This is a follow up on my post dated September 25, 2009. It should be in my archive and will give closer detail on how I came up with Spiral Calendar projections I’ll discuss below. The preamble to this “follow up” condenses and says the same thing as the September 25, 2009 post.
Chris Carolan discovered a Fibonacci/lunar relation between 1929 and 1987 and documented it in his excellent book “The Spiral Calendar”. He identified 4 dates in 1929 that reappeared near exactly (within the projection measurement error of 1 day) in 1987. Forgetting about his astrological reference to the lunar months in relation to the first equinox of each year, he related 1987 to 1929 by taking the square root of the 29th (“F29”) number in the Fibonacci sequence (514229 or “F29”) and multiplying by the synodic lunar interval or 29.5306 day. So, the square root of 514229 is 717.0976 X 29.5306 = 21176.32 days. Take 4 key dates in 1929 add 21176.32 days and you get the comparable date in 1987 in relation to that crash year:
http://www.screencast.com/users/Virginia….
I discovered and have not seen it written elsewhere that 2009 preliminarily appears to be reflecting the Spiral Calendar dates in 1987 and 1929. So what? It’s easy to project any of the Spiral Calendar Fibonacci computations forward…..just math. And you can take the 4 dates in 1929 and project them by every Spiral Calendar sequence you won’t get a single date in 2009. But you can with 1987. The 25th (“F25”) Fibonacci Spiral Calendar sequence gives you the four dates explained in the above Excel chart in 2009; July 11, 2009 (significant low), October 16, 2009 (final highest high in the crash year), November 23, 2009 (secondary high before a crash) and December 10, 2009 (crash).
So, you can make a 1987 projection to 2009; what makes this other than pure numerology? Nothing. Any extrapolation of history to the future is numerology absent physical or deterministic mathematical support. Gaussian statistics (bell curve) and variants, even given widely accepted causal rationalization, is numerology; it’s just very persuasive and accepted. The Spiral Calendar projection is different only in that it is not very persuasive. There isn’t a whiff of causality.
But there are two ‘conincidents’ that preliminarily support these projections. First, F29 interval between 1929 and 1987 is 21176 days or 58.0 years and the F25 interval from 1987 to 2009 is 8088 days or22.1 years. Their relation is .381, a near perfect and highly prominent Fibonacci relation. Second, July 11, 2009 is the first of four projected dates, is now behind us AND IT WORKED. July 11, 2009 should have been a prominent low next preceding the final highest high before the crash. Recall on July 11, 2009 everyone was following the unconfirmed head and shoulders top and vastly expecting a crash. It didn’t happen. Instead, July 11, 2009 was a clearly significant and widely unanticipated bottom (July 11 was actually a Saturday and July 10 was the bottom). I’ve updated a chart I posted September 25 and this is what the IMPLIED FRACTAL looks like to date:
http://www.screencast.com/users/Virginia….
If one had noticed this 4 date projection on July 10, 2009, you would have gone long to October 16, 2009 (not followed the H&S fiasco) and would have made, yet to be determined, but probably greater than 24% on an unlevered long trade. Then you would have gone short to sometime in early November and long into the 3rd date of November 23, 2009 (the F25 projected secondary high before the crash). Here’s an idea of the proportions of price change between the four dates (note that I’ve added a fifth date, namely the first bottom after the highest high):
http://www.screencast.com/users/Virginia….
So, IF October is a valid projection, the 1929 and 1987 models would indicate a substantial first wave decline of 10% to 17%. I think it could be greater than either because we are in the last stages of the peak crash season (as documented by Stephen Puetz, Chris Carolan and Peter Eliades). December 10 is late for a crash. And, many Ellioticians believe the projected wave commencing after October 16 is at a very high degree of Elliot Wave trend; EWI would show it as intermediate (1) of primary circle 3, of cycle c, of supercycle (a) of grand supercycle (IV).
Three notes of caution. Chris Carolan has not identified his own Spiral Calendar projection from 1987 to 2009 as significant, either by oversight or has dismissed it. I cannot confirm it either way despite efforts to contact him and his followers. Carolan’s website shows his computation based on 2007 and 2008 dates as indicating a top on October 11, which has not worked (more than one day off at this point). Second, Carolan originally noted the coincidence of 1929 versus 1987 dates in relation to the number of new moons following the spring equinox but distilled his thinking in terms of Fibonacci and synodic lunar intervals. 2009 is one moon greater than 1929 and 1987 so that gave me pause when I first considered these dates. I’ve rationalized the contradiction in noting the true computation is not relative to the equinox but it is a Fibonacci computation in lunar intervals. Third, this is the purest form of numerology; not hint of causality.
So, all we have is four dates and two “coincidents”. If I’d projected this six months ago, and said it would occur BECAUSE of a .381 relation in the years between 2009 and 1987 divided by the years between 1987 and 1929, I’d say the chances of four monument dates in 2009 being successful would be incalculable. If I’d noted that item and July 11, 2009 turned out to be a successful projection, I might say the odds of the other 3 being successful were within the realm of number system but still negligible. But, since we are narrowing in on October 16, 2009 and despite the emotions in the last months since July 11, 2009, it is still viable. I am very interested.
If October 16, 2009 prints a new recover high (or October 15 or 19), I will be giving far greater weight to the implications of this model. I’ll be expecting an Elliot Wave primary 3 of cycle c to begin very soon thereafter. Granted it’s only an intermediate 1 of primary 3, but it can be crashworthy IMO. Remember the character a c wave is that it is not expected by anyone; certainly, with a blowoff top in the making today, October 14, 2009 on top of INTC and JPM earnings, who expects a crash?
But who expected, on July 11, 2009, that the market would not have fulfilled the great head and shoulders top de jour of that date much less been 24% higher three months later?
Good luck,
hi Ross
The links in your write-up doesn’t seem working. could you please post proper links?
Fantastic article/comment from Ross
Based on the Twitter trial campaign, most of the calls are not as profiting as we desired. Perhaps you might want to extend the period till end of Oct or early Nov to cover a single complete cycle of crash/correction such as 22% for Oct itself. This is a very good way to boost the confident of newcomers (most of the Twitter-followers) as well as leading to record breaking of many subscribers to your products. Please extend your Twitter (both investor & Trader) trial as I guess most of us (if not all) are seriously following your good sharing…
Been following about two weeks. I have seen nothing technically or sentiment wise to warrant such a bearish position as yours. Seems to me like you are trying to predict a lightening strike. Good luck with that. 22% down by end of October that’s about 900 SPX…..ok you say so.
Hello Mr. Savoldi.I m from India. If this forecast of yours proves to be correct, I assure you a very big number of subscriptions. Happy Trading to all of you.
Why just $100 or $25 a month?
Mahendra is way worse in his predictions than JG and still charges between $1000 and $2000 a month – and there are enough sheeple to pay for all that misleading and wrong predictions. And each year he goes more than once on holidays.
Most lemmings and sheeple have no thinkin of their own – and hence they are ready to pay almost each price for somebody leading the way. If marketing is well done – you can earn tons of money. Just be right from time to time (once a year f.e.) – what is a given if you stick to your predictions – and you’ll be their guruji.
Amazing. Though not surprising.
You get what you deserve.
Hi JG,
How can your model be so accurate in time ?
It doesn’t seems the market wants to fall and the bullish sentiment appears very strong.
So if the 22% crash of October doesn’t happen, does it invalidate the BAM prediction ?
So what I understood, your model is based on the historical market behaviors and models it for the future… But since march the rally has never been so bullish in a so short time with so little volume, is it possible that it could false the model because this situation never happened before ?
Thanks for your work and for helping us to understand…
(sorry for the english, i’m French)
have you guys ever seen the cot timer web site. it show where the big money goes each week, (long or short). starting nov 2 it is very bearish. if your interested this is the site. http://www.cotstimer.blogspot.com/. just another thing to look at. tony
What an airshow! The BAM P51 Mustang “Stock Market Nellie” was supposed to take a dive down on to the runway but instead went straight up. But wait its slowing up, looks like its over 10,000 feet above the runway now, i hear some sputtering, its like its hanging in the air, just stuck there in the sky.
Oh my, its slowly falling back now. The pilot will start the engines and go higher. But now its falling, faster now. Oh wow its like a rock, 9,000 feet, 8,000 feet, I don’t here the engine….he has to land now. Next stop the runway, elevation – 5,000. What a rush!
If your right by THANKGIVING of a major down-leg trend change. I’ll give you $400 a year.
thx
pl
if the prediction comes true, you should cough up 4000 a year …
I will be very happy with a drop to 1050 on the S&P this month. But the way the market is going up everyday, it doesn’t look like the 22% crash is going to happen. As a matter of fact, we may never see a significant drop in the markets in ‘Obama / Bernanke / Geithner’ kingdom with their ‘Trash the Dollar’ policy.
Dollar is the key here. If it doesn’t start to move up from here, a market correction is going to be only in our dreams.
Hello from Russia!
Can I quote a post in your blog with the link to you?
From last night’s high, the SP emini has declined 5 waves to 1078 area and is just completing an ABC .382 retracement 1086. It should decline another 5 waves down
form 1086 in Elliottwave terms or is it another false move? $ Index has had 2 moves up from low. Needs a new recovery high to maintain upside potential.
I am moving all in November puts waiting for the 20% down for the next 2 weeks …
The problem with making time specific calls and having them go unrealized is a story as old as civilization (see Aesop). Being right early can be the same as being wrong, especially in our highly leveraged financial universe. Even getting the timing right can be problematic. Look what happened to Charles Babson. Vilified (many blamed him for triggering the crash) and largely forgotten for his prescient warning of early September 1929.
So far all the personalities who had called a top are wrong.
Yves
Neely
Prechter
and many more
The casulties of the ‘top’ callers are just increasing.
Frankly, its a higher risk to call for a top in this rally (which is on declining vol and on no fundamentals) than to long the market.
No new highs next week= bulls are roasted.
Mon and Tues are critical for the bears and bulls alike.
Aapl looks gassed, bidu gassed, intc, gassed..Goog couldnt lift the market today..the market leaders are running on fumes….look at LQD and JNK….writings on the wall….
I have been following the BAM Model for some time now, first was it on Techcrunch, I have been bearish for a while now, have been buying FAZ, SRS,FXP and just recently bought DUG, mostly trough recommendations of the BAM Model.
I am under water in all of them, have been averaging FAZ from 25 all the way down to 18, have a 21 average right now, I have to be honest I was getting nervous on Wednesday when I saw the JPM report and the Dow hit 10K, but then I saw the GS report and City Report and then saw how the markets are being artificially inflated.
Last night a friend emailed me this video about Goldman Sachs
http://www.metatube.com/en/videos/22863/Goldman-Sachs-Bonus-Scandal/
And at that moment I thought “Im OK” even do I got hit with this bearish ETF’s I have been short on the USD for quite a while now, and even thinking of covering next week,
When Goldman Sachs starts doing these type of tricks in order to make money, it’s time for a crash, so best of LUCK to the BAM Model, if the market drops 10% this month, then you have my subscription.
Semiconductor index frequently leads the market. Checkout the ETF SMH. Looks like its rolling over.
I believe you were a week early in your call. Futures pointing to …….a crash? to early to say, but weaker open none the less.
I posted above about the emini having completed 5 waves and to expect another 5waves; That has been accomplished by going to1076.25. Unfortunately that constitutes an ABC. Also both the euro and aussie $ did the same thing. This is another disappointing attempt to crash. We’ll be monitoring possibilities. So many technicals indicating the possibilities/probabilities for a crash;for now it may try moving up a bit.
I bet everything I have that this crash will not happen.
Sentiment is far too bearish overall….
It has been stated that the market will have a not reason to turn down as long as investors are convinced that earnings in 2010 are going to return to 2007 levels, which at present, seems to be the case. As we saw in July with the 2nd quarter earnings releases, the 3rd quarter earnings releases are continuing to propel the markets to higher ground. There will need to be a “negative catalyst” or major unforeseen event that will be necessary to shake investors current level of complacency with regard the to high stock prices. It seems your whole call for a “crash” has come down to this for the Fed, the MSM and the total arsenal of the US Treasury are determined to prevent just that.
Ben Bernanke, the Fed chairman is depression expert. His Ph. D work was on great depression. So he will use all and or any Pansy scheme to avert the stock market crash. Every facet of economy is crashed and equity market is the only thing they have left to keep on propping. People (consumers) are loosing jobs, homes (some cities now have tent cities for them. Sacramento and Seattle is couple of them), banks are ripping off the depositors and debtors. I believe Goldman Sac and JP Morgan will go down in history of finance for greatest crooks and Government insiders. At this time they will keep it up but who knows one day they will decide to pull the plug and market will go down and stock prices will adjust to their true value SP at 70ish. Yes 70ish it is not a typo.
It’s amazing how wrong your forecasts look like now….
My last post was calling for another move in the Emini to new highs which was accomplished. It was the aussie, euro, $ Index which was the calatyst in making new highs, Having accomplised producing a poss/probable CIT in the $ Index after new lows at the close of biz in the US yest after. noon. Obviously, ztrength is need in the $ Index firstly above 76.00 which should propel short covering. In achieving or exceeding 77.47.5 is the area which would cause panoc short covering and conocomitant declines in equities, commodities and gold.
75.103 appeared to be a good possible low for the $ Index to have completed 5th of the diagonal. I rallied to the top of a small wedge to75.763 in 3 waves and lo to behold like clockwork, a sell off testing the low is taking place momentarily just as the Fed & Treasury was there to stop any rise in the INDEX. Paranoid? I don’t think so. Will check back when I see a reversal up and concomitant decline in the euro and aussie.
Where’s the CRASH??? Market just hit a yearly HIGH.
Edward,
EW does not work for trading. I have’nt met a person yet who makes money TRADING EW.
It’s great After the fact. Period