Another Warning Bell Rings for the Stock Market
By: Claus Vogt
Jun 09, 2010
A short four weeks ago, the stock market impressed us with what was later dubbed a flash crash — a sudden 1,000 point plunge in the Dow Industrial Average, followed by an equally fast retracement of half the decline. Impressive, indeed, but also an important technical sign.
My interpretation of that episode is that it was a typical warning crack …
A warning crack appears at the end of a bull market’s move. It’s a sign that the character of the market has changed; that the topping process has started. It’s like ringing a bell, a harbinger of what the future holds. And the severity of this particular warning crack is a sign of the severity of the bear market ahead.
Then last Friday, another warning bell sounded …
On the surface, Friday’s 323 point loss for the Dow was not that impressive. We’ve seen much larger drops in past years, especially in 2008. But beneath the surface, this decline was very impressive, making it one of the outstanding events of the last 50 years.
You see, the stock market is much than the major indexes are mirroring. It’s also …