It has been exactly 28 years since the market really “crashed” in October of 1987. Well, if we don’t count Nasdaq’s 2000 “mini crash”.  On that day in 1987, the Dow Jones Industrial Average plunged a gut-wrenching 508 points, or 22.6%.

But, here is what everyone forgets. At least according to this article. Everyone forgets the most important thing about the Black Monday stock market crash of 1987

• Stock market crashes don’t lead to recessions. The stock market follows GDP.

My Comment: Actually, it’s the opposite. It is the stock market that leads the economy/GDP, etc….. and not the other way around. And crashes do lead to recessions or worse. Just take a look at 1907 or 1929 or 1937 or 1946 or 1972 or 2000 or 2007. At all of those junctures the US Economy was booming. That abruptly changed when financial markets headed lower. At times in a violent fashion.

• They are great buying opportunities as stocks always recover. 

My Comment: Long-term YES, but at certain junctures it takes time. A very long time. Plus, it depends on where we are in the cyclical composition of the market. The reason 1987 crash was recovered so fast was due to the fact that we were just starting a 1982-2000 bull market. On the flip side, the 1929 crash took over 20 years to recover. Well, 50 years of a flat inflation adjusted market if we go back to the termination of a previous bull market in 1899.

Is a crash possible in today’s FED controlled market?

Most people or professionals will argue that the answer is a clear NO. The FED has too much influence on what the market does. My answer is a most definite YES. For a very simple reason. When no one expects something to happen, it often does. Particularly, when it comes to financial markets.

Is Another Crash Possible In Today’s FED “Controlled” Market?  Google

The chart above has spread around the financial community like a wildfire, predicting a 1987 type of a crash (20% down in 1-2 trading days) Is it legit? The chart is legit, but comparing today’s market environment to 1987 is like looking up horses ass to see it’s teeth -OR- it confuses cause and effect. 

While I am not suggesting that the crash is not possible, you could compare today’s market to many of the 5-year cycles I have described on this blog. Click Here to read some of it. In a nutshell, today’s market matches many other 5 year cycles, not only 1987….1924-1929, 1932-1937, 1961-1966, 1982-1987, 1994-2000, 2002-2007, 2009-2014, etc…there are many others. 

When the 5 year cycle completes itself the market tends to roll over. It will not be different this time around. Whether the market will crash or simply roll over into a sustain long term bear market is irrelevant here. What is relevant? The bear market of 2014-2017 is just around the corner and it will slam stocks over the next few years. If you would like to know exactly when it will start (to the day) and it’s internal composition, please Click Here. 

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Is Another 1987 Type Of Market Crash Around The Corner?  Google

Breakout Writes: Dow hits record as 1987 crash comparisons continue

Has a longtime Minnesota bull turned bearish? Jim Paulsen, Chief investment strategist at Wells Capital Management, came out with a peculiar research note earlier in the week. Paulsen highlighted some similarities with an S&P 500 (^GSPC) chart from our current bull market with one that shows a similarity to the 1982 bull market that culminated int the Black Monday crash in 1987:

the contemporary bull market has been following the 1982 bull market fairly closely. As recently as last year-end, both bulls were up about 175% from their respective bear market lows! The important anniversary passed just a couple days ago was the 1274th trading day of both bull markets – the day on 8/25/1987 when the 1982 bull market reached a notable peak. On that day, the S&P 500 Index peaked for the year at 336.77. Moreover, we are now just 37 trading days from another important anniversary in financial history – 10/19/1987 when the S&P 500 Index suffered its biggest single day collapse ever!

As intriguing as the comparison sounds, and with the Dow (^DJI) and S&P 500 hitting new all-time highs today, Breakout viewers will remember these comparisons with past market moves have usually been non-predictive. But fun market talk, sure.

Paulsen will be the first say he doesn’t see a big, ugly 20% move coming. “I’m not anticipating that [1987 type crash] at all,” he says, but he does point out the genesis of both bull markets as very similar – born out of extremely tough economic times in 1982 and 2009.

“I would suggest that history won’t repeat, i don’t think we’ll have a big collapse… but sometime in the next several months, good news on the economy might become bad news for the market like it did in 1987.” Paulsen says a 10% move wouldn’t surprise him in the least.

Despite his call for a modest correction, Paulsen still feels strongly that investors should be positioned aggressively in cyclicals (XLY), with this morning’s “Goldilocks” payrolls number keeping the market happy, and leaving the Fed little option but to continue its low rate policy and slow taper.