Hans Hannula - The Crash of 1997 Article moneytide
This material is extracted from the August 1997 Cash In On Chaos Newsletter, published August 25, 1997 by Dr. Hans Hannula, phone 303 452 5566, fax 303 457 9871.
I have departed from the normal format for the Cash In On Chaos Newsletter to bring you a special report. I have a special message. The stock market is dangerously close to a crash.The first chart shows why I think so. This chart is an overlay of the 1987 market and the 1997 market. I first received a copy of a chart showing this overlay several weeks ago. It came from Larry Pesavento of Tucson, AZ. Larry is a very experienced trader and market master, so I respect his view immensely. When I looked at his chart, he had aligned the markets using the
April lows. I realized that the April 21st lows in '87 and '97 marked the 5 and 15 year anniversaries of the first trade date of the S&P 500 index. That meant that the alignment was aligning natural cycles. Six months from this April anniversary date the market made a major low in 1987. It could well do so in 1997.
Many readers have enjoyed riding the immense bull market of the past few years and the participation in mutual funds, their retirement funds, and IRA's. Many of these people are entirely new to stocks and the dangers of markets. The danger is this: All the gains that you have made since 1994 could be wiped out in a few months. The market could drop 20 - 40 percent.
This is not a claim that it will happen, but a warning that it very well could happen. Prudence suggests that you immediately move your investments to the sideline until after the October/November lows.
This means pick up the phone and call the appropriate number and ask that your money be put into money market funds. Then in October or November one of two things will be clear. The drop will have occurred and there will be bargains galore or if there is no drop, the market will break above it's old highs and resume a bull market. You may safely reenter the market under either of those two conditions. Until then, get out, stay safe, and avoid the riskiest period the market has seen in the last decade.