A Silver Lining on the 25th Anniversary of the '87 Crash (Part-I)

By: Joseph Russo | Sat, Oct 20, 2012
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1987 Crash Headlines

25-years ago on October 19, 1987 - the stock market had its largest single day decline ever. Prior to this crash, Elaine Garzarelli's claim to fame was predicting that calamitous event.

Five years ago, on the 20th anniversary back in 2007, and eerily similar to the 200-pt decline this year, CNBC was taping an interview with her amid the largest one-day decline (366-pts) in months and within 6-days of the 2007 market top prior to the two-year crash.

Garzarelli was bullish, touting that the market was still in the midst of a secular bull market. At the time, just one week after the top of the 2007 bull market and smitten by the power of the Fed, she maintained stocks were undervalued and had more upside potential basis her indicators.

In her defense, she did stress that $125 crude oil would throw a wrench in the gears and bring about a recession however, she further postulated that she thought Oil was at a peak and would be moving lower not higher. At the time, Oil was trading near its all time highs in the 90-dollar range.

Even the irreplaceable Mark Haines could not believe that $125 oil was plausible. Exactly 38-Fibonacci weeks later, Oil peaked at $147 the week of July 11, 2008. By that time, the Dow had yet to reach its 2009 bear market bottom, but had already lost more than 3000 pts from its all time 2007 high of 14,198.10, which remains unchallenged to date.

Here is the CNBC clip from 2007:

The clip below features Garzarelli in January of 2012, amidst the Fed-induced bailout rally, which was nudging the Dow back toward 13,000 from a March 2009 low of 6,470. Ms. Garzarelli appeared to possess a renewed sense of bullishness, and stated that the Dow could hit 15,000 by 2014.

Here is the CNBC clip from January 2012:



Given the fundamental truths surrounding a flawed global monetary policy of fiat currencies, and the unsustainable debt-based structure of industrial economies as a whole, it is truly hard to fathom that the Dow and S&P have continued to run-up within a stone's throw of their all time historic highs.

Before we get into the BIG Silver Lining that is presenting itself right now, we would like to take the balance of part-I to share some smaller positive aspects in illustrating how the Chart-Cast Pilot has been faring against the price action across the entire financial sphere.

Below are the latest performance stats for the broad market portfolio of the Chart-Cast Pilot.

Latest performance stats for the broad market portfolio

Playing the S&P like a Fiddle:

Mid-month we moved long S&P futures from 1431.75, and booked $925 per contract as we reversed short just in time for today's big decline. Prior to getting our bearish email alert, we had provided an additional heads up for Pilot members by illustrating a 12-pt sell trigger trajectory, which went on to capture its downside price target at 1436.40.


Riding the Short-Term Fear of Deflation in Gold:

Shortly following the Fed's announcement of perpetual QE, values in all financial markets rose sharply, reflecting assured additional losses in purchasing power across global fiat currencies, namely the world reserve US dollar fiat.

The chart below illustrates the reaction in gold on the day of the QE-to-infinity announcement by the Fed. We were already long from 1615, and had an additional heads-up 15-pt buy-trigger in place, which handily captured its target at 1679.

Nearest Gold Future

... You can read the balance of Part-I here.



Joseph Russo

Author: Joseph Russo

Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology

Joseph Russo

Since the dot.com bubble, 911, and the 2002 market crash, Elliott Wave Technology's mission remains the delivery of valuable solutions-based services that empower clients to execute successful trading and investment decisions in all market environments.

Joe Russo is an entrepreneurial publisher and market analyst providing digital online media solutions designed to assist traders and investors in prudently and profitably navigating their exposure to the financial markets.

Since the official launch of his Elliott Wave Technology website in 2005, he has established an outstanding record of accomplishment, including but not limited to, ...

  • In 2005, he elicited a major long-term wealth producing nugget of guidance in suggesting strongly that members give serious consideration to apportioning 10%-20% of their net worth toward the physical acquisition of Gold (@ $400.) and Silver (@ $6.00).

  • In 2006, the (MTA) Market Technicians Association featured his article "Scaling Perceptions amid the Global Equity Boom" in their industry newsletter, "Technically Speaking."

  • On May 6 of 2007, five months prior to the market top in 2007, though still bullish at that time, he publicly warned long-term investors not to be fooled again, in "Bullish Like There's No Tomorrow."

  • On March 10 of 2008, with another 48% of downside remaining to the bottom of the great bear market of 2008-2009, in "V-for Vendetta," using the Wilshire 5000 as proxy, he publicly laid out the case for the depth and amplitude of the unfolding bear market, which marked terminal to a rather nice long-run in equity values.

  • Working extensively with EasyLanguage® programmer George Pruitt in 2010 and 2011, the author of "Building Winning Trading Systems with TradeStation," he assisted in the development of several proprietary trading systems.

  • On February 11, 2011, he publicly made available his call for a key bottom in the long bond at 117 '3/32. Within a year and half from his call, the long bond rallied in excess of 30% to new all time highs in July of 2012.

  • For the benefit of members and his general readership, he responded to widespread levels of economic and financial uncertainty in the development of Prudent Measures in 2012.

  • He publicly warned of a major top in Apple on October 26, 2012 in the very early stages of a 40% decline from its all time high.

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