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Crash Index Q&A

The Market Crash Index is provided to us courtesy of Pitbull Investor. It was developed by W. Henry Ford, developer of The Pitbull Investor ( mechanical stock trading system. This indicator usually signals a -10 about 2 weeks before a major market crash, and has NEVER FAILED to signal before a major U.S. Stock Market Crash!

Market Crash Index Signal Readings

    These are the significant things to look for on the Crash Index:


    SHORT TERM SELL SIGNAL - Exit or lighten long positions in that sector and move to cash.


    CRASH ALERT - Exit long positions in that sector, move to cash, increase short positions in that sector.


    ALL CLEAR / BUY SIGNAL - After a -6 Short Term Sell Signal or a -10 crash signal we will wait for a reading of +6 as the green light to start buying in on long positions again.

How Long After A -10 Do You Wait Before You Declare It A False Signal If The Market Doesn't Crash?

We will stick to our position until we see a +6.

Question: Todays reading is a -8 today, do I exit my long positions??

No.!! We do not act on this index unless it signals a Sell..When we get a reading of -6 we will be on alert, liquidating positions and keeping a close eye on the index. Waiting to see if it progresses to a crash signal. The crash index will often bounce between -6 and +10 in normal market swings, but when it reaches to the -6 or -10 point it is better to be safe than sorry.

Question: The Market Crash Index is at a +2, why is the market down today??

This is not a market timing tool designed to tell you if the market will close lower or higher today. It is designed simply to warn us before a major stock market crash with ample time to safely exit our long positions. This index is used as a leading indicator to warn of the possibility of a large negative drop in the market, (20% or more), as indicated by a failure in underlying market fundamentals.

Question The Crash Index Just Dropped from a +2 to a -4 what do I do??

Nothing!! ONCE AGAIN! We do not act on this index at all unless it reaches a -10..Once it reaches a -10 we will remain in cash until the index returns to a +6, at which time we start buying in on long positions again.Any reading other than a -10 (or a +6 following a -10) is insignificant.

Investor Guidelines for a -10 CRASH ALERT READING:

      • Exit or convert all margin positions to non-margin until the PCI signals all clear.
      • Exit all riskier 4 letter stocks( 4 letter meaning Nasdaq or OTC issues)
      • Increase short positions on selected stocks, (see Pitbull Shorting Selections)

This indicator has never failed to get us out in time for a major market crash, usually providing at least two weeks advance notice.


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