Stock analysts issue 'Black Tuesday' warning

Stock analysts issue 'Black Tuesday' warning
Trends on anniversary of 1929 collapse indicate markets on verge of 'crash'

On this 80th anniversary of the "Black Tuesday" stock market collapse, some analysts are experiencing déjà vu, warning a major crash in the stock market is imminent.

Graham Summers, senior market strategist at OmniSans Research, wrote in the firm's daily e-letter yesterday that the markets may finally be on the verge of the crash he has been predicting for more than two months.

"Well, judging from the market's action today, I believe we may be within 48 hours of getting the "Official Sell" signal I've been waiting for," he wrote in "Gain, Pains, and Capital."

The Dow Jones Industrial Average lost 119 points yesterday, or 1.2 percent, while the NASDAQ lost 2.7 percent. The Russell 2000 index of smaller companies dropped 3.5 percent.

Summers explained in an online piece Tuesday that he has been watching an ominous pattern develop in which the trading range shrinks as stocks rise higher. In the past, that pattern has led to a sharp downturn, he said.

"I've been forewarning of a potential crash for months now. And the market's current action is precisely what you would expect for a major top (increased volatility)," Summers wrote.

Author and WND columnist Vox Day, asserts in book released last week, "The Return of the Great Depression," that the U.S. is entering the early stages of the Second Great Depression.

Day concludes an economic contraction of very large proportions is developing. But he contends that "due to a reactive wave of positive social mood, statistical obfuscation and understandable denial, it will take about a year for the consensus opinion to cycle through the various scenarios in descending order of optimism before the grim reality finally becomes apparent to even the casual observer."

Summers says the "issue now is whether this rally gives up this week, rolls over and breaks below the trend line or if there will be some greater push to the upside."

Roger Wiegand, editor of Trader Tracks newsletter, says "crash forecast reports are flying in from analysts."

"We see this stuff all the time, but the recent number of them with more strident and panicky tones does not bode well for these markets," he writes. "Our readers know where we stand and our professional analyst friends agree with us. It's only a matter of time."

Wiegand warns: "Headwinds are building into an economic hurricane."

Looking back at the crash of financial institutions last fall and the May recovery that began with passage of the TARP, the Troubled Asset Relief Program, he looks at this month as the end of a "dead cat bounce" as investors sell off stocks.

"We are at a turning point in most markets," he says.

Day's credibility as an economic forecaster is bolstered by his prediction seven years ago of the collapse of the housing market and the destruction of the financial services industry, in addition to some remarkably precise market forecasts.

In a Sept.23, 2002, WND column, he wrote:

There can be little doubt that the implosion of the equity markets will soon be followed by the pricking of the credit and real estate bubbles. As great financial houses such as Citigroup and JP Morgan Chase teeter on the edge of bankruptcy, it is well within the realm of possibility that the triple whammy of the equity, credit and real estate implosions will lead to the collapse of the entire global financial system.