High Stock Volatility — Crash Recipe

John Disney
5 min readOct 17, 2022

The Frequent Market Ups/Downs are a Signal

When you are regularly coughing and sneezing, it’s a sign of something worse. It could be a severe cold, a virus or worse. Just as in the human body, ironically the Stock Market, precious metals market, and the Crypto-Market acts similar before something worse is about to happen. If you research every major market crash in history going back to 1929, the same is true. The way it normally plays out is quite a bit of up and down volatility for months, then surprisingly there is a false recovery and slight upward trend. The phony upward swing will last a couple-few weeks, then the coughing and sneezing starts again. That means, the volatility begins again; however, the 2nd time this happens –the up/down swings are slightly more dramatic. Twenty or 30 years ago that would mean 300–400-point daily swings up or down. Nowadays however, it means 600–700-point swings because the market’s value is much higher.

Guess where we are at now? That’s right my friend, we have gone through the first round of hiccups and the first false positive upward trend. The next thing to expect is the 600–700 DJIA swings that will occur once or twice weekly (or more). When that happens for several weeks, then …as they say in America “All Bets Are Off.” The crash happens afterward, and although it might not happen all at once, like a “Black Monday”, it could last months before we hit a bottom. The bottom however, will be about 40 to 50% lower than it is today. That is what will be the “real bottom” that many financial newscasters talk about.

At this stage in the game, it is easy to see that the markets are beginning to acknowledge that the Federal Reserve will continue its onslaught of raising interest rates as much as needed to tame inflation. Foolish investors keep trying to “pick the bottom” and throw money into a market that is destined to fail. They ignore the daily bad news, and somehow think it’s just a little blip on the financial radar. Unfortunately for them, it’s a practice that continues to backfire. There will be no real bounce back that is sustainable until the big downward trend ends. There are just too many headwinds: inflation, oil shortages, lingering supply chain issues, Ukrainian crisis — possible nuclear conflict, and much more.

If you are into technical analysis and trend watching (like inverted head/shoulders, etc.), do not (I repeat DO NOT) think that is going to make any sense for future predictions. We are in…

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John Disney

Public Speaker, Investment Manager, Social Media Influencer & YouTube Self-Improvement Entertainer: https://www.youtube.com/channel/UCXAEvlQYNQ2x6-v-VdK6_Zg