RECOMMENDED READING

Below there are links to books, charts and other sorts of information sources that complement the ideas expressed in this article. The books, which you are not likely to find at your local bookstore, may be securely purchased online through Amazon Books. If you would like to purchase any of the books recommended in this article, please link to the order forms through this web site.

Elliott Wave Tutorial	Elliott Wave Charts	1997 Crash
Online Elliott Wave Discussion With Robert Prechter -

There is reason to believe that the U.S. stock market is reaching the most important top in history and now an unprecedented collapse is at hand. Based upon the Elliott Wave Principle, Dow Theory, psychological barrier phenomenon and "astroharmonics", a case can be made that we are at a critical turning point in stock prices and could now enter the worst bear market in American history. Specifically, the DJIA appears to be topping-out around the psychologically important 8000 mark in connection with a significant planetary alignment. Following a stock market peak at Dow 8000, collective expectations might be upset by the most disappointing world events since the Great Depression and World War II. Indeed, these events could have everything to do with the prophetic "End of the Age".

So you can better understand why an important stock market and historical turning point may be at-hand, one must first realize that the prevailing theories of so-called stock market "experts" are terribly mistaken. In standard college courses for finance and economics, it is taught that stock market investors rationally discount information about the value of companies in making investment decisions. Consequently, stock prices tend toward equilibriums that reflect the intrinsic values of American corporations. Only unexpected, new information about given businesses or the general health of the economy can change investors expectations and make stock prices move one way or another. Consequently, the stock market, guided by investors "rational expectations", should follow a completely unpredictable "Random Walk".

The reality of the situation is that the stock market is constantly driven to extreme disequilibriums by the irrationality of investors' greed and fear. Consequently, market prices follow a fairly predictable cyclical path best described by R.N. Elliott's Wave Principle. The turning points in these cycles can be determined through analysis of stock market price charts, volume charts, sentiment indicators, valuation measures, cycles and astroharmonics.

One of the most obvious examples of how predictable stock market swings can sometimes be is the so-called "psychological barrier" phenomenon. Several times in stock market history, important tops have been reached at psychologically significant thousand marks in the DJIA.

Between the 1960's and 1980's, the DJIA reversed from the "Magic 1000" mark five times- by more than 30% on average each time. (Note that the first time the Dow reached 1000 and reversed was February of 1966 when a major seven-planet alignment took place.)

Likewise, in mid-July of 1990, the DJIA closed at a peak of 2999.75 two days in a row and then entered a three-month, twenty percent collapse into October of that year. (This reversal coincided with a six-planet alignment.)

In January 1994, the Dow approached the 4000 mark for the first time in history. The DJIA reached an intraday high of 3985 and print high of 4002 and then reversed, entering a year-long, ten-percent correction in stock prices. (This top at the psychologically important 4000 mark coincided with the tightest seven-planet alignment in 300 years....which the Wall Street Journal correctly anticipated in an article dubbed "A Rare Planet Alignment Bodes A Bust For Booming Stock Market" on 1/12/94, p.B1.)

Lastly and most recently, in February and March of this year the Dow climbed slightly above the 7000 mark and then the first ten percent correction since 1994 occurred into April.

Remarkably, each time the DJIA reversed from psychologically significant thousand marks, important negative historical events occurred that fit the associated reversal in investors' expectations and therefore seemingly "caused" the stock market to decline.

Each time the DJIA reversed from the "Magic 1000" barrier between 1966 and 1982, there were all kinds of troubles which emerged ranging from OPEC oil embargoes, to the Vietnam War, to Watergate. One of the most notable cases occurred in October of 1973 when the DJIA rose to just below Dow 1000 as the Arabs launched a surprise attack against Israel which, in turn, led to a major East/West confrontation and an Arab oil embargo against the West. Consequently, the world economy entered a severe contraction and stock prices plunged (see CHART).

In the summer of 1990, the DJIA reversed from 3000 and then Iraq invaded Kuwait, thereby triggered a Persian Gulf crisis and major oil-shock that "caused" the world economy to slip into a recession and stock prices to plunge (see CHART).

As for Dow 4000, right after the DJIA reversed from 4000 in January of 1994, the Fed hiked interest rates and the stock market fell by ten percent and entered a year-long correction (see CHART).

Finally, just after the Dow climbed above the 7000 mark earlier this year, the Fed hiked interest rates for the first time since 1994. Again, as in 1994, the DJIA reacted with a ten percent drop.

Another approach for anticipating stock market turning points through technical analysis is applying Dow Theory. According to Martin Pring's Technical Analysis Explained, an investor who bought and sold stocks according to Dow Theory buy- and sell-signals between 1897 and 1981 would have reaped a return more than nineteen times that achieved from simply buying-and-holding.

According to Dow Theory, to determine when to buy and sell stocks, one should keep an eye out for non-confirmations. Non-confirmations occur when the Dow Jones Industrial Average reaches all-time highs while the Dow Jones Transportation and/or Utility Averages do not reach all-time highs (and/or other major averages like the Nasdaq Composite and S&P indices). This phenomenon occurred in both 1990 and 1994 when the DJIA peaked at 3000 and 4000, respectively. (Notably, a major reason the Dow Jones Industrial, Transportation and Utility Averages appear on top of each other in the Wall Street Journal each day is likely to help investors spot Dow Theory non-confirmations.)

As can be seen in current charts of the Dow Jones Industrials and Transports, and Utilities, the most recent all-time highs in the DJIA are being confirmed by record highs in the Transports but are not confirmed by new highs in the Utilities (the Dow Jones Utility Average peaked way back in October 1993). Given that the DJIA's most recent high near 8000 was not confirmed by a record in the Utilities Average, there is reason, although not a substantial reason, to believe that the final top has been reached. While a peak in the Industrials unconfirmed by record highs in the Transports would be a stronger indication that the final top has been reached, the fact that the most recent record high in the Industrials was not confirmed by concurrent highs in the Utilities is sufficient reason to conclude the final top may be in.

If the Dow's rise to around the psychologically significant 8000 mark unconfirmed by the Utilities and other major indexes in recent weeks is signalling a turning point in the stock market, then, based upon the Elliott Wave Principle, there is reason to believe the most important turning point in stock market history has been reached.

According to the Elliott Wave Principle, popularized during the 1980's by Robert Prechter, the stock market should rise toward cyclical peaks in fractal-like five-wave patterns that typically develop between upper and lower channel lines. First there are five-waves to a peak (up-down-up-down-up) and then there are three waves to a cyclical low (down-up-down). By looking for the five waves up, particularly in the context of channel lines which guide the trend, one can determine when cycle tops are reached.

Based upon the Elliott Wave pattern, it is apparent that a major long-term top is being, or has been, reached in the stock market. As seen in a logarithmic chart of the DJIA from the late-1800's, a trendline drawn through the Supercycle Wave-I peak reached in 1937 and the Supercycle Wave-III top made in 1966 continues through a final Supercycle Wave-V peak at the current juncture (The Wave Principle calls for the use of logarithmic charts when dealing with long-term stock price charts.) Importantly, the rising pattern is between Elliott Wave channel lines- the line drawn through the 1937 and 1966 peaks in the DJIA is nearly parallel a lower trendline drawn through Supercycle Wave-II low in 1942 and the Wave-IV low in 1974/1982.

A similar five-wave pattern to a Supercycle top is visible in long-run charts of the S&P 500 and NYSE indices. In 1996, these broader measures precisely reached their Supercycle upper trendlines in mid-February (at the precise time of the Spiral Calendar anniversary of both the September 1929 and August 1987 stock market peaks), in late-May and again when the S&P broke above 700 in 1996. As is visible in a long-run chart of the S&P 500, distinct Elliott Wave channel lines can be drawn around the upward trend in the index from 1932 to present. In other words, one can draw a trendline through the Supercycle turning points in the S&P 500 and NYSE indexes to project the resistance reached in February and May of 1996. Right now the S&P and NYSE indexes are in a blow-off move significantly above their respective Supercycle upper channel lines.

If, indeed, a Supercycle peak is currently being reached with the DJIA, S&P and NYSE stock indexes trading above their Supercycle upper channel lines, then this should be the top of an Elliott Wave Grand Supercycle and possibly a Millennium Cycle as well. This is because of the way Elliott Waves develop in fractal-like patterns- where any given cycle is made up of smaller cycles. By examining charts covering different time-spans of history (AstroEcon also has a decent series of Elliott Wave charts), it becomes apparent how stock prices and general prices have climbed to a final top in five-wave patterns of increasing scale. This represents the rise of Western civilization toward a Millenium Cycle, Grand Supercycle and Supercycle peak over the last 1000 years, 200 years and 60 years, respectively. Thus, the current stock market peak should constitute the most important turning point in history.

As indicated above, a reliable indicator of important stock market turning points and associated Elliott Wave turning points is literally the stars. There appears to be a substantial empirical basis to what some call financial astrology and others call astroharmonics (a decent web site for information about market astroharmonics is Robert Hitt's AstroEcon).

One of the most impressive astroharmonic phenomena in the stock market is the consistent correlation between planetary alignments and significant market turning points. More often than not, major stock market tops and bottoms occur around the time of relatively rare planetary alignments (usually in the vicinity of the new or full moons near the time of given alignments). (Please note that the sun and moon are considered "planets" in these alignments; a reason such alignments tend to occur with new and full moons.)

Consider, for instance, reversals in stock prices from psychological barriers and Elliott Wave trendlines.

Following the 1932 Elliott Wave Supercycle low point, the DJIA rose to a major top in the Spring of 1937 that coincided with a five-planet alignment in April of that year.

Next, stock prices slumped to a World War II low in 1942 near a new moon/five-planet alignment in June of that year.

Following the 1942 low along the Supercycle lower channel line, stock prices climbed to Dow 1000 by February of 1966, when a major seven-planet alignment occurred.

After reaching 1000, the Dow swung back and forth for almost two decades in a major Elliott Wave zig-zag correction. In October of 1974, when the Dow hit the low point of the correction from 1966, there was a tight alignment of six planets. In 1982, the stock market again bottomed along the Supercycle lower trendline that was met with the 1974 low. This low point coincided with a significant five-planet alignment.

After the 1982 low, stock prices rose more than four-fold by August of 1987 when an important top was reached with a new moon/five-planet alignment associated with the so-called astrological "Harmonic Convergence". The '87 Crash followed this top.

The next major stock market peak after 1987 occurred in July of 1990 when the Dow topped precisely at 3000. This peak coincided with a six-planet alignment just prior to a new moon/solar eclipse.

Following the 1990 top, the next significant peak occurred in January 1994 when the Dow first reached 4000. The top at 4000 took place just after the tightest seven-planet alignment in three hundred years (see the article, "A Rare Planet Alignment Bodes A Bust For Booming Stock Market", in the 1/12/94 issue of the Wall Street Journal, p.B1).

Finally, following one of the most significant planetary alignments since the August 1987 Harmonic Convergence in January/February of this year, the DJIA climbed briefly above Dow 7000 and then fell by ten percent.

All in all, by applying the Elliott Wave Principle, technical analysis and astroharmonic analysis to the stock market, one may conclude that the most important turning point in history is being reached and a major collapse is now at hand. With the DJIA's rise to 8000, which has gone unconfirmed by record highs in the Utilities average, Elliott Wave patterns of Grand Supercycle or even Millenial proportions are possibly being completed. Consistent with the historical pattern, the current potential peak in stock prices is being reached around the time of significant planetary alignment.

As I have been warning for years, in the wake of the critical Grand Supercycle turning point that we may now be reaching, a crash of unprecedented proportions should occur. This crash could very well involve an outbreak of global war and the End of the Age.