The DJIA dropped nearly 150 points today to close below the psychologically important 9000 mark. The break below Dow 9000 and character of today's sell-off suggest that a stock market crash may be imminent. It would not be surprising to see a ten percent single-day plunge in stock prices before the week is out and possibly as soon as tomorrow.

As I have pointed out time and time again, there is a tendency for the stock market to drop sharply upon reversals from psychologically important thousand marks. Furthermore, negative historical shocks often occur upon such reversals.

The most recent example of a sharp reversal from a thousand mark was late last October when the DJIA reversed from the 8000 mark. Right after the Dow fell below 8000, a worldwide stock market panic occurred that culminated in a 554-point drop in the DJIA on October 27th- the largest single-day point loss in Wall Street history. At the time this sharp break in stock prices was attributed to a collapse in Asian financial markets, but it coincided perfectly with the Dow failing at the psychologically important 8000 mark.

(For other examples of this "psychological barrier" phenomenon, see the graphs linked below and read my recent article: "Dow 9000 & Market Crash, War?" or "Dow 9000 & The Shock?".)

Other examples:

If what happened when the stock market dropped below 8000 last October repeats here with the Dow's reversal from 9000, then another mini-crash could occur. If the mini-crash is on the same scale as what happened last October, then the DJIA could fall back to the 8000 mark in a short time.

There is reason, however, to believe that the current reversal from Dow 9000 is going to be worse than last October's reversal from 8000.

First off, if one examines charts of the Dow Transports and Utilities, indices that serve as leading indicators of future market movements, one sees that these averages have thus far fallen significantly farther than the Industrials.

This is also true of the Nasdaq Composite of over-the-counter stocks and the NYSE financial stock index.

One also might note that the Dow Utilities topped prior to the Dow Industrials. Such a divergence indicates a minor Dow Theory sell signal- the first such signal since just before the 20% correction in the stock market that occurred way back in 1990. (Note that one of the few positives for this market is that there were no major Dow non- confirmations at the recent peak above DJIA 9000. Typically, at market peaks prior to major, prolonged bear markets the Dow Industrials reach record highs while the Transports and Utilities have reached peaks months or even years ahead of time. This was not the case at the recent top in the DJIA above 9000, something that suggests the Great Bull Market might have more to run.)

Also worrisome is that foreign stock markets have been getting hit much harder than the U.S. Dow thus far. In Asian and European trading prior to today's 1.6% drop in the DJIA, major foreign indexes fell anywhere from 2% to 7% (see the related news article below). Thus, the market correction getting underway is both sharp and worldwide in scope.

A reason that the current stock market decline could become a major panic is because of its seasonal timing. Historically, there are only three months that the stock market is down on average: September, October and May. While September and in particularly October are widely recognized as likely times for stock market panics- such as occurred in 1929, 1946, 1978, 1979, 1987, 1989, 1990 and 1997- market crashes into and during the month of May are less familiar. Yet, this does occur. While typically May sell-offs are in the 5-10% range such as occurred in 1966, 1967, 1970 and 1984, full-scale crashes have also taken place such as in 1884, 1893 and 1962. Thus, because of stock market seasonality, we are now entering a period when Wall Street is vulnerable to panics. (One might note that the suicide rate peaks in May and then has a secondary peak in October- further indicating the circannual rhyhthm of mass mood swings that makes the Spring and Fall bad periods for the stock market.)

All in all, with the Dow's drop below 9000 today the U.S. stock market, and stock markets worldwide, may be entering a crash. A leading sharp sell-off in the Dow Transports and Utilities as well as small caps, financial stocks and foreign equities suggests that a major stock market correction is getting underway. While a quick drop in the Dow to 8000, a parallel decline of last October's mini-crash, is possible here, it would come as no surprise if a more substantial breakdown occurs in the coming days and weeks. Seasonality suggests that what is developing is a market crash into the seasonally negative month of May.

Fortunately, thus far the reversal in stock prices below Dow 9000 has not coincided with the development of a major international crisis like an outbreak of war in the Middle East and/or the Balkans. Nevertheless, such crises tend to develop in the context of stock market reversals like the one now underway. If war does erupt in the Middle East and/or the Balkans and this is eventually associated with a nationalist coup in Russia, then one best take cover. Such developments would indicate that the crash taking place is the Grand Supercycle crash I have been warning about. In which case, world war three is likely at hand.

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                           RELATED ARTICLES
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            "Goodbye 9,000: Dow Jones loses 146.98 points"

NEW YORK (April 27, 1998 4:49 p.m. EDT) -- Stocks fell sharply Monday, 
extending last week's losses and sending the Dow industrials  tumbling 
more  than 200 points.  But prices recovered ground late in the day as 
buyers moved in to pick up bargain stocks.  

The broad selloff came as markets in  Asia  and  Europe  stumbled  and 
long-term  interest  rates shot back above 6 percent in the U.S.  bond 
market.  

The Dow Jones industrial average,  which lost 102.88 points last week, 
was  down  nearly 220 at one point but closed down 146.98 at 8,917.64. 
The average of 30 blue-chip stocks,  which hit  an  all-time  high  of 
9,184.94 last Tuesday, still is up about 12 percent this year.  

Broader market indicators also fell sharply.  But as the session wound 
down,  the market seemed to be following its recent pattern of "buying 
the dips" -- finding buying opportunities after big declines.  

With  the  quarterly  flood of earnings reports winding down and fewer 
prospects for more record-setting gains,  traders are getting  jitters 
about the market's rapid rise.  

Adding  to  the worries was a report Monday in the Wall Street Journal 
that Federal Reserve policy-makers agreed at a March 31  meeting  that 
their  next step is more likely to be to raise rates.  Minutes of that 
meeting are not scheduled to be released until next month.  

Earlier, policy-makers had been anticipating that the crisis in Asia's 
economies would cool off inflationary pressures in the  United  States 
without the need for the Fed to put on the brakes.  So far,  there has 
been little evidence of significant economic fallout.  

But there also are worries in financial  markets  that  conditions  in 
Asia could worsen unless Japan snaps out of its long economic malaise. 
A  government  stimulus package announced Friday has been greeted with 
skepticism in financial markets.  

Tokyo's Nikkei Stock Average plunged 2.26 percent Monday.  Stocks also 
were lower in Europe.  

On the U.S.  bond market,  yields on 30-year Treasuries leaped to 6.06 
percent by midafternoon from 5.94 percent late Friday.  

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          "Wall Street reels on fears of a Fed rate increase"

                 Monday April 27, 5:33 pm Eastern Time

                             By Huw Jones 

NEW YORK, April 27 (Reuters) - Wall Street stocks tumbled on Monday as 
investors ran for cover,  fearing a Federal Reserve increase in short-
term rates next month.  

The  worries  also  sent  the  long  bond tumbling,  pushing its yield 
sharply higher to snap the record run in stocks.  

``Fed Chairman Greenspan expertly used his jawbone tool to do what  he 
wanted  to to raise market rates without affecting change in policy,'' 
said Phil Orlando,  chief investment officer  at  Value  Line's  Asset 
Management division.  

"The market did exactly what Greenspan wanted it to do." 

The  Dow  Jones  Industrial  Average  closed  unofficially down 146.98 
points, or 1.62 percent, at 8917.64, after easing off the day's low of 
8840.  

The bellwether 30-year Treasury bond was  down  1-18/32,  pushing  the 
yield up to 6.06 percent.  

The  sell-off was triggered by a Wall Street Journal article that said 
the Fed had moved from a neutral stance to a tightening bias on  rates 
at its March 31 meeting.  

Analysts  said  the leak was deliberate to spook bonds and cool stocks 
because it would be  difficult  to  actually  raise  rates  with  U.S. 
inflation tame and Asia is still suffering.  

``The  reason the market took such a nose dive on the news was because 
we started from a position of being overvalued,'' said  Hugh  Johnson, 
chief investment officer at First Albany.  

``It  is  doing something which they (the Fed) think is healthy,  that 
is,  they are pulling the market back from the edge  of  overvaluation 
and speculation,'' Johnson said.  

The broad market S&P500 index fell 21.36 points to 1086.54,  down 1.93 
percent on the day.  

On the New York Stock Exchange,  declining issues trounced advances by 
3  to  28 on volume of 690 million shares.  The Nasdaq ended off 48.65 
points, or 2.60 percent, at 1820.31.  

Several Fed governors  have  also  warned  about  the  U.S.  economy's 
strength in spite of Asia's slowdown.  

Alan  Greenspan has said rates were being kept steady because Asia was 
expected to dampen U.S.  growth.  The Fed declined to comment  on  the 
Journal's article.  

Monday's sell-off was also due to a confluence of factors:  a slowdown 
of funds,  overvalued stocks and speculative froth as seen in Internet 
stocks,  said  Scott  Bleier,  chief  investment  strategist  at Prime 
Charter Ltd.  

``I feel they are not going to raise rates in May, but it's definitely 
an excuse to cool the jets,'' Bleier said.  

A tightening bias did not necessarily mean a rise, analysts said.  

``It's a big step toward having a bias  toward  restraint  and  hiking 
short-term interest rates,'' Johnson said.  

The  stock  market  is  expected to continue pulling back as investors 
take a closer look at economic indicators for  signs  of  inflationary 
pressures, analysts said.  

Prudential   Securities  chief  technical  strategist  Ralph  Acampora 
expected a five to 10 percent correction in the Dow,  taking the  blue 
chip  index  to  between  8,200  and  8,700.  It will still hit 10,000 
sometime this year, he added.  

The volatile technology stocks  and  rate-sensitive  financial  stocks 
were among the worst hit.  

Bellwethers such as Intel Corp. (INTC - news), Microsoft Corp. (MSFT - 
news), Dell Computer Corp. (DELL - news), Compaq Computer Corp. (CPQ - 
news), and International Business Machines Corp.  (IBM - news) led the 
tech pack lower.  

Intel ended off 2-1/16 at 80. Microsoft shed 1-13/16 at 90-5/16.  Dell 
fell two to 74-5/16. Compaq ended down one at 28-1/16. IBM shed 2-1/16 
at 115-5/16.  

Bankers Chase Manhattan Corp.(CMB - news) fell 1-7/16 to 132-5/8, J.P. 
Morgan & Co. (JPM - news) ended off 3-7/8 at 131-3/4.  

The Philadelphia Stock Exchange's index of banking stocks tumbled 3.20 
percent.  

Overseas  stock exchanges were also pulled lower by the fear of a U.S. 
rate rise.  The FTSE100 index in London shed  141.5  points,  or  2.41 
percent, to close at 5722.4.  

Among the other movers in U.S.  stocks, Pfizer Inc.  (PFE - news) fell 
4-13/16 to 113-7/16,  despite news that its new impotence drug  Viagra 
had  113,134 new prescriptions in the week ended April 17,  its second 
week on the market.  

Music company K-Tel International (KTEL  -  news)  bucked  the  market 
trend to gain eight and close at 34-3/4.  

K-tel  announced  a worldwide marketing pact related to its new online 
music service.  

Cincinnati Bell Inc.  (CSN - news)  rose  2-14/16  to  36-13/16  after 
announcing  it will spin off its billing and customer management units 
to create a new company.  

The road ahead may be bumpy  for  stocks  as  investors  sift  through 
economic  indicators  ahead  of the next Fed meeting on May 19.  ``The 
average investor has to wait and see if  the  Fed  decides  to  follow 
through on that change in bias,'' said Value Line's Orlando.  

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          "FOCUS-Europe markets shiver as US rate fears grow"

                 Monday April 27, 6:45 pm Eastern Time

                           By Cheryl Juckes 

LONDON,  April 27 (Reuters) - Fears of a rise in U.S.  interest rates, 
perhaps as early as May 19,  sent European bourses and bonds cascading 
into  the  red  on  Monday  and  raised the spectre of a global market 
crash.  

By the London close,  the Dow Jones Industrial Average  had  recovered 
slightly but was still down 1.6 percent.  

---------------------------------------------------------------
MARKET PRICES AT 1608 GMT 

 Mark 1.7879/84        Yen 132.20/30        Sterling 1.6718/28
 Gold $310.10/0.60 -2.8 (pvs PM fix)        Brent $14.1 +0.2
 FTSE 100 5722.4 -141.5 CAC 3685.83 -97.51  X-DAX 5002.71
-141.71
 ---------------------------------------------------------------

London's FTSE 100 blue chip index finished 2.4 percent or 141.5  point 
lower  --  its  largest  point  fall  this  year.  But there were more 
dramatic percentage losers elsewhere.  

Greek shares tumbled by 7.0 percent and the Italian  market  lost  6.6 
percent as retail investors panicked.  

Italian Treasury Minister Carlo Azeglio Ciampi tried to calm nerves as 
the  Italian  market  waved  goodbye to some of this year's 40 percent 
gains,   commenting  that  the  bourse  was  showing  an  ``irrational 
frenzy.'' 

But  in  the United States,  dealers said there were no signs of panic 
selling, adding the market had been due a correction.  

``Everything hinges on what happens on Wall  Street  overnight  now,'' 
said Ian Williams, strategist at Panmure Gordon in London. ``But in my 
opinion  there  are  too  many people being cautious for there to be a 
crash.'' 

The  rate  jitters,   which  also  knocked  U.S.   shares  on  Friday, 
intensified  after  a  Wall  Street  Journal report on Monday said the 
Federal Reserve had shifted from a neutral to a tightening bias at the 
March 31 meeting of the policy-making Federal Open Market Committee.  

U.S. rates have been on hold for more than a year.  

``Markets are right to be very cautious about what the Federal Reserve 
might do,'' said DKB chief economist Gerard Lyons.  

``The risk of a U.S.  rate rise has gone up recently,  not because  of 
the  data  but because of some of the comments we've had recently from 
Fed officials.'' 

Lyons said he did not believe the U.S. economy needed an interest rate 
rise but comments such as those last  week  from  Fed  Governor  Roger 
Ferguson,  who  warned  that  rates  might rise,  had suggested a more 
hawkish stance from the Fed.  

In bonds, the U.S. market was hardest hit, with Treasuries down almost 
1-1/2 points.  

The British market  followed  with  gilts  edging  towards  one  point 
losses.  German Bunds were over 3/4 point weaker amid the added burden 
of last weekend's elections in the East German state of Saxony-Anhalt.  

On the foreign exchanges,  the yen took centre  stage,  setting  four-
month  lows  against  the  mark after Bank of Japan board member Kazuo 
Ueda said a further depreciation of five to 10 percent  in  the  yen's 
value  against the dollar would not pose a very large economic risk to 
Japan.  

He also said he would like to see a cut in the official discount rate, 
already at a  record  low  of  0.5  percent,  if  economic  conditions 
worsened.  

The yen was hovering at 73.91 per mark after hitting 73.93,  its worst 
level since December 15,  1997.  It clawed its way back to 132.20  per 
dollar from 132.80.  

The  yen  was  also  undermined  by  a drop of 2.26 percent in Japan's 
Nikkei stock index as the 16 trillion yen government package announced 
on Friday failed to cheer the market.  

The  German  markets  were  also  chewing  over  the  battering  which 
Chancellor   Helmut  Kohl's  CDU  party  received  in  Sunday's  state 
elections in Saxony-Anhalt.  

Analysts said the markets  were  taking  the  news  in  their  stride, 
despite  some  ripples of worry about the success of the extreme right 
German People's Union's (DVU) party.  

Analysts downplayed the results, arguing that the strong result of the 
DVU would not have much bearing on the national scene.  

European markets were also worried about the weekend's  EU  summit  at 
which  the  formal  choice of the states to launch the single currency 
will be made.  

There are also hopes that the row over  who  will  head  the  European 
Central Bank (ECB) will be resolved.  

European  Commissioner  Yves Thibault de Silguy said on Monday that EU 
leaders were expected to name the head of the ECB for  a  full  eight-
year mandate, although nothing would stop him from stepping down early 
if he chooses to do so.  

He  also  said  it  seemed  unlikely  that  the  EU would seek a third 
candidate to solve a row over the ECB post,  in which Bank  of  France 
Governor   Jean-Claude   Trichet   is   pitted  against  Dutchman  Wim 
Duisenberg.  

Major equity market moves: 

* Athens general index down 7.0 percent  on  profit-taking;  investors 
preoccupied  with  media  reports  of  a delay in the privatisation of 
Commercial Bank (CBGr.AT).  

* Italy's all-share Mibtel index closes  down  6.57  percent  after  a 
day's  low  of  minus  7.83  percent  on  selling  by  domestic retail 
investors.  

* Lisbon down 6.1 percent.  

* Amsterdam shares close down 5.0 percent, hit by options trade.  

* Madrid down 3.4 percent 

* Brussels down 3.2 percent.  

* Copenhagen shares down 3.2 percent on a labour dispute  which  began 
on Monday, covering almost one fifth of the workforce.  

*  Frankfurt's computer-traded Xetra DAX index lost 2.8 percent before 
recovering back above the 5,000 support level.  

* Paris's CAC-40 retreated by 2.6 percent, below its key psychological 
level of 3,700.  

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         "Wall St doomsayers warn: The (rally's) end is near"

               Wednesday April 22, 2:34 pm Eastern Time

                          By Marjorie Olster 

NEW YORK,  April 22 (Reuters) - Among all the red  flags  Wall  Street 
investors  look  for as warnings the stock market's dramatic rally may 
be nearing its end, perhaps the one that had them most worried was the 
latest Newsweek magazine cover.  

The caricature of a tiara-crowned bull in  a  wedding  dress  fronting 
this  week's  edition of the widely read U.S.  news magazine is a sure 
omen of impending doom, stock market veterans said on Wednesday.  

``By the time the editor assigns people like you and me to put  a  big 
story on the cover, everybody knows it is a bull market and it is very 
late in the game,'' said Robert Stovall,  president of Stovall/Twenty-
First Advisers.  

``Usually when you see a bull on the cover of a major  magazine,  that 
is the end.'' 

Michael   Burke,   editor  of  the  bi-weekly  Investors  Intelligence 
newsletter  that  publishes  a  closely   watched   bulls-versus-bears 
sentiment index, explained the concern.  

``If too many people are bullish,  people are fully invested and there 
is not much money on sidelines.  The proverbial Wall of Worry  is  not 
there.'' 

The  merger  mania  on  Wall Street,  a speculative run-up in Internet 
stocks recently and a surge in initial public offerings (IPOs) in  the 
first  quarter  all  point  to  a frothy enthusiasm that is typical of 
market tops, analysts said.  

Harry Laubscher,  market analyst at Tucker Anthony,  said another sign 
stocks  are  headed  for  a  downturn is the growing evidence that big 
money managers are almost  fully  invested  while  weaker  buyers  who 
missed  the  big move up are stepping in late in the cycle to purchase 
stocks.  

He also noted that last week, breadth readings which measure advancing 
versus declining issues,  were weak even as the Dow Industrial Average 
set record highs.  

``The  generals  are  charging  up  the  hill  but the army is pulling 
away,'' Laubscher said.  ``We are anticipating in the next week or two 
we will have major correction.'' 

Of  course,  there are still plenty of optimists on the Street gunning 
for Dow 10,000 after the blue chip index easily topped 9,000  for  the 
first time ever earlier this month.  

But  the  doomsayers see that as just another harbinger of the pain to 
come.  

``We see  a  certain  complacency  in  investors'  psychology,''  said 
Stovall.  ``They  feel  that  if  there  is  a dip,  there is a buying 
opportunity.  

``There is not enough fear and not enough credence  is  given  to  the 
spreading  Asian depression.  Most people think it is an acute case of 
the flu but it is a chronic case,'' he added.  

The Dow has rocketed up 16 percent so far this year from 7908  at  the 
end of December to about 9185 on Wednesday.  Meanwhile,  first-quarter 
corporate earnings estimates were scaled back  dramatically  ahead  of 
the  reporting  season,  some  due  in  part  to  the economic malaise 
plaguing Asian nations.  

Although most companies have come in at or above the  sharply  reduced 
expectations, profits are down significantly from the fourth quarter.  

Many  analysts  are  concerned  stocks  are too richly valued given an 
increasingly uncertain earnings outlook.  

The Standard & Poor's 500 index and the  Nasdaq  composite  ratios  of 
stock prices to trailing 12-month earnings are at historic highs -- 28 
and 69 times respectively, Stovall said.  

Dividend returns have dropped below 1.5 percent for the average S&P500 
stock  which  means  people are paying too many dollars for a dollar's 
worth of dividends, he added.  

Another closely-followed market sentiment  indicator  is  telling  the 
same story. Burke said the Investors Intelligence bulls-to-bears index 
shows  bears are at a six-year low of 22.3 percent versus 54.6 percent 
bulls.  

When the survey of investment newsletter writers was  first  conceived 
in  1963,  it  was thought a higher percentage of bulls would signal a 
market rise. But it turned out the contrary was true. In a normal bull 
market, Burke said the percentage of bulls to bear is about 45-35.  

Burke also said selling by insiders of their own companies'  stock  is 
on   the  rise,   indicating  the  market  will  turn  bearish  around 
summertime.  

One potential threat to the rally could come from the Federal Reserve. 
There were growing fears in the market  that  robust  economic  growth 
will lead the Fed to raise rates, increasing the cost of borrowing for 
companies and consumers.  

The  International  Monetary  Fund added to the jitters,  warning more 
than once in the past week of the danger of a major U.S.  stock market 
correction.  

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