Could A Market Meltdown Begin Tomorrow?

I am not saying that this will happen, but let me lay out the case for tomorrow being the day that the stock market craters and begins a descent to 8,000 on the Dow and below in the coming months. A lot of factors are aligning that could make tomorrow and Friday harrowing days in the markets. First thing in the morning, we will have the initial and continuing jobless claims numbers. Last week's initial claims number came in at 500,000 compared to consensus estimates of 475,000 indicating a worse than expected deterioration on the jobs front. This sent a shiver through the market on August 19th, when the Dow opened above 10,400. We are now at 10,060. Today's trading action ahead of Thursday's and Friday's economic reports also sets up for a possible steep decline tomorrow. Stocks staged a dramatic reversal after initially sinking on the Durable Goods and Home Sales data. The bullish price action, and the fact that the market held support at Dow 10,000 and S&P 1040, has possibly breathed a bit of optimism back into the market. If the numbers are sufficiently bad tomorrow, and they have been terrible for some time, the optimists will be forced to examine their positions and will likely puke up what they bought on Wednesday. This may add to selling momentum which could catalyze a move below major support levels which are within striking distance for the bears. A move first below Dow 10,000 and then below S&P 1040 on heavy volume is sure to get traders attention. It could potentially trigger a cascade of sell stops and beckon technical traders to jump in on the short side. Furthermore, if we see terrible jobs numbers, there is unlikely to be a lot of big buyers ahead of Friday's GDP revision and the final reading on the University of Michigan Consumer Sentiment index for August. There are likely to be even less buyers if an initial push down takes out the key support levels highlighted above. Add to this the flurry of Hindenburg Omens that have been flashing in recent weeks, and the odds of a substantial leg lower in stocks beginning tomorrow appears to be much higher than normal. For those of you who have not heard of the dreaded "Hindenburg Omen," it is a technical indicator that has a reasonably accurate track record predicting imminent stock market declines. Now all of this is highly speculative, and the odds are against a 400 or 500 point down day in the Dow, but I think it could happen. We have not seen any big panic sell-offs during the recent stock swoon which began on August 11th, when the Dow fell 265 points. I wouldn't consider that day a panic sell off, but a sell off nonetheless. But what we have witnessed is a grinding decline and it feels as if something more climatic may be around the bend...If we make an early morning run below Dow 10,000, I would head for the hills.