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If the SP500 closes below 1170 today, this selloff heightens the probability of my compressed-crash call.

As a reminder, I’ve been calling for a 33% chance of what I called “A Heavier Crash” on September the 29th. This email is by no means is meant to be a victory-lap. Probable doesn’t mean likely… but heightening probabilities need to be monitored, acutely.

So what would a Heavier Crash look and feel like? I’m in print saying that “the most probable scenario that the perma-bulls would consider improbable is a 1-3 day correction on the order of -5.4% to -6.9%.”

Notwithstanding the bad karma that’s associated with any October 19th (1987’s crash), there is a very high probability that a TRADE line breakdown through 1170 puts the 1144 line back in play on the downside. From yesterday’s 1184 close, that would be a -3.4% correction – not a compressed crash – but… and there’s always a but… there are still plenty of days left in October… and bad US housing data is on the docket for next week.


Keith R. McCullough
Chief Executive Officer

Bull/Bear Battle: SP500 Levels, Refreshed...  - 1