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With the DJIA right around the psychologically important 8000
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With a DJIA reversal from 8000, a Grand Supercycle crash in collective expectations and social mood will likely occur. This is a crash that Western society has been working up to over the last 200 years, at-the-least. As the seasonality of swings in mass mood suggests, the most likely time for "The Crash" to occur is now at-hand, i.e., the "Black" month of October- when the 1929 and 1987 stock market crashes occurred.
What could seemingly "cause" such an October Grand Supercycle crash in mass mood? Let history serve as a guide.
After the DJIA had pulled-back substantially below 8000 from a peak about 5% above the "Magic 1000" mark in January of 1973, the DJIA retested 1000 (closed within 1% of 1000) in October of that year.
As the DJIA approached and reversed from 1000, Syria led a Yom Kippur Arab surprise attack against Israel. Consequently, there was a severe oil-shock and stock prices fell by 40% by October of the following year.
Similarly, in mid-July of 1990, the DJIA closed two days in a row at 2999.75 and then reversed course. The reversal in stock prices and mass mood precisely coincided with a speech made by Iraqi leader Saddam Hussein which threatened Kuwait. Soon after that Iraq invaded Kuwait and stock prices plunged 20% into October of that year.
Given the historical pattern, I believe the most likely source of an upset of investor expectations and crash from Dow 8000 at the current juncture is war. In particularly, there are growing signs that Saddam Hussein's Iraq and/or Syria are about to launch a surprise attack against Israel.
As was revealed to me in February of 1991, a war is going to erupt in the Middle East that will begin with a chemical SCUD missile attack against Israel.
One possibility right now is that Iraq is going to launch a kamikazee chemical SCUD missile attack against the Jewish State, and thereby seemingly set-off a new Arab-Israeli war, in retaliation for new U.S. military action against Iraq. Recent troop movements by Iraq have raised concern in Washington and, apparently in response, the U.S. has been prepositioning forces in the Persian Gulf region for a swift strike against Iraq:
"Twenty F-15s and F--16s deployed to Bahrain last Thursday and are being joined by two B-1 Bombers. All are from the 366th Composite Wing from Mountain Home Air Force Base. As significant, General Richard Hawley, Commander of the USAF Air Combat Command, arrived in Bahrain today for a 'routine two-day visit,' increasing the level of control exercised on U.S. forces in the region."Now all Saddam has to do is blow his nose the wrong way and the U.S. will be bombing Baghdad once again. In response to such new American "imperialist" aggression, Saddam can exact his Arabic revenge by striking Israel with chemical SCUDs hidden away in the Iraqi desert. Israeli's response, in turn, will create a pretext for Syria and other Arab powers to make war against the Jewish State.
On top of such a "Saddam's Revenge" scenario, there is also the possibility that the Arabs, or at least Syria in particularly, are simply going unleash a new war against Israel with complete surprise in the near-future. Importantly, today is Rosh Hoshanah, the Jewish new year (with a new moon of military strategic value for surprise attacks). Consequently, for the next ten days, Israel's Jews will be in their Days of Repentance- the period each year when the Jewish State is most subdued and vulnerable to a surprise attack. Indeed, it was on Yom Kippur, the holiest final day of the 10 Days of Repentance, when the Arabs last launched a surprise attack against Israel in 1973. Thus, given the current breakdown in the Middle East (false) peace process, it might be that Syria, which has been making preparations for a surprise attack against Israel and has recently been (openly) seeking to ally with Iraq and Iran, is now going to attack Israel seemingly out-of-the-blue (or at least the out-of-the-black of a moonless night?).
Thus, sometime during the next ten days, one way or another, the world might suddenly find itself watching the same report of a chemical SCUD attack on Israel I saw more than six-and-a-half years ago. Whether it be via Saddam's Revenge or a Syrian surprise attack, there is reason to believe that a new war in the Middle East is close-at-hand.
Unfortunately, as I also have foreseen, this new war in the Middle East will be a precursor to a global nuclear war and an ultimate crash in U.S. and Western expectations.
