Dr. Doom' Predicts: Get Ready for a 1987-Style Crash

[Editor's note: the following is a cross post by Alex Rosenberg that originally appeared on CNBC.com]

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The S&P has rallied 19 percent in 2013, which is impressive by any measure. But the market did far better in 1987, when stocks added more than 30 percent from the beginning of the year to Aug. 8.

The problem?

The market ended up tanking in the second half of that year—dropping 36 percent from the Aug. 25 peak to the October low, before closing out 1987 nearly exactly where it began.

And Marc Faber, publisher of the Gloom, Boom & Doom Report, predicts that the very same thing will happen in the back half of 2013.

"In 1987, we had a very powerful rally, but also earnings were no longer rising substantially, and the market became very overbought," Faber said on Thursday's "Futures Now." "The final rally into Aug. 25 occurred with a diminishing number of stocks hitting 52-week highs. In other words, the new-high list was contracting, and we have several breaks in different stocks."

Faber says that's exactly where we find ourselves this August.

"If you look at the last two days," Faber said, referring to Tuesday and Wednesday, "it's remarkable. We are close to the all-time high, at 1,709 on the S&P, and yet yesterday and the day before, there were 170 new 52-week lows. That's a very high figure."

That means that the market has become very reliant on a very small number of companies.

"The only way this market can go up is if the 10 or 50 stocks that are very strong continue to drive the market higher, with the majority of stocks having actually peaked out," Faber said.

This as the macro environment is only getting more difficult. "Some of the tailwinds we've had—such as massive monetization and falling interest rates—are no longer in place," he said.

So what kind of a decline does Faber predict, once all is said and done?

His year-end market call lives up to his "Dr. Doom" moniker. Faber expect to see stocks end the year "maybe 20 percent [lower], maybe more!"

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