The scenario described in my "CRASH UPDATE" (1/7/22) on the Home Page seems to be playing out on schedule (so far). The DOW and S&P 500 formed significant all-time high tops in early January (the NASDAQ's all-time high top came a little earlier - in late November 2021), and all three indices have been falling steeply from those highs. We are now at a critical juncture. All three indices made deep lows on February 24 (the DOW hit a bottom at 32,272, the S&P 500 dropped to 4,116, and the NASDAQ plunged to 12,598). From the all-time highs, this represents a 12% drop in the DOW, a 14% drop in the S&P 500, and a whopping 22% drop in the NASDAQ.
All three indices have bounced up sharply from those Feb. 24 (last Thursday) lows. But is this going to be just a "dead cat bounce"? In other words, can this rally gain some momentum and lead to another challenge to the all-time highs in one, two, or all three of these indices? Or will the rally struggle and turn back down soon to go deeper than those Feb. 24 lows? This is the big question now.
The NASDAQ has already exceeded a 20% correction. If this market does turn back down soon, and the DOW and S&P 500 also fall more than 20% from their all-time highs, there's a good chance that a serious "crash" will be underway. A second possibility could be another strong rally into April with one, two, BUT NOT ALL THREE indices making new all-time highs. This would be a strong intermarket bearish divergence signal, and the big "crash" could proceed from there. A third possible scenario would be for all three indices to rally strongly now with ALL THREE making new all-time highs. If that happens, there's a good chance the serious correction would be over, and there would likely be no crash. Right now, the first scenario seems most likely, the second scenario a little less likely, and the third scenario (no crash) the least likely. It should be more clear which scenario will play out by the end of this month.