IF MR. BARNUM is to be trusted, about 3 per cent of the American population are certified suckers. And that may be all it takes.

When the New York Stock Exchange closed January 7, the Dow Jones ticker stood at 1004 and some change, a high-water mark for recent months. The bull market that began with the election of Ronald Reagan showed every sign of plowing ahead. And the edition of Joseph Granville's Market Letter, a leading private forecast service, that reached investors that morning stated that "the market is signaling a sharp upswing ahead...Buy aggressively," it advised.

But at 6:30 p.m., a bank of 30 workers began making telephone calls from a Florida office. In New York, in Los Angeles, around the world, men and women answered their phones and heard the following: "Hello. I have an early warning for you. Sell the market. Sell everything. Sell short any stock that is up substantially from last April's lows." The advice came from Granville again--his list of 44 market indicators, he would later insist, showed him the market was due for a certain fall. The phone calls went to subscribers to his early warning service.

But that round of calling was only the beginning. Granville's followers swung into action immediately, unloading all the stock they owned. Sell orders were so heavy that 100 stocks could not begin trading when the Wall Street bell sounded the next morning at 10 a.m.--there were simply no buyers. It was 2 p.m. before International Business Machines could begin trading. Granville's warning, the Wall Street Journal said, was "an oracle widely, even blindly, followed." Taking advantage of the time differences, investors quickly sold stock in American companies on overseas markets; prices plummeted as well on Toronto's main Canadian exchange.

Several thousand subscribers warned by Granville were selling--as the news spread, individual investors and even some institutions began to follow the trends. By day's end, the ticker tape was trailing badly in its race to stay apace of the action, and no wonder. January 8 saw a new trading record--93.7 million shares--10 per cent higher than the ebullient buying spree triggered by Reagan's November triumph. And there was no doubt about the direction of the sudden spurt. Prices on the Big Board fell 23.8 points.

THE MAN WHO IGNITED the selling spree, Joseph Ensign Granville, appears something of a crackpot. The 57-year-old son of a Yonkers market player who lost it all in the last big crash, Granville ran an investment advice service for those who dealt in postage stamps during the 1950s. He moved up to play with the big boys in the '60s, working for E.F. Hutton until his brash unorthodoxy began to clash with the fundamentalist corporate ethic of the firm.

And so, he struck out on his own. With a vengeance. He plays to packed lecture halls around the country; sometimes, he appears with a helium balloon which he releases while yelling the question "How high is the market going?" Other nights he comes dressed as Moses, complete with tablets full of investment advice. He castigates Wall Street professionals as "bag holders" (the title of a novel he is currently writing) and "losers." Not only that, he predicts earthquakes, although he always adds sincerely that this is "one prediction I hope I'm wrong about." And after a hard day on the road, Granville heads for Holly Hills, where he totes up his technical indicators--factors such as the number of new highs, and total volume--and then edits his weekly letter. More than ten thousand subscribers, at $250 a year. Let's see...Pretty near $3 million a year, not bad for someone who once failed an aptitude test at Merrill Lynch.

Granville's customers may not be getting as rich as their mentor. Those who subscribe to the Market Letter presumably bought stock hours before he issued the sell order and then took a fall when prices began to tumble. And even many of the "early warning" customers found themselves hard-pressed to earn top dollar in the frenzied selling that the phone calls triggered. But it's hard to feel too sorry for anyone who swallowed the Moses act.

Another problem looms, though--it is not inconceivable that Granville, or someone like him, could manage virtually to take over the market, sending it up and down at his whim. Think of it like this--now that Granville has a track record (augmented by a 13-point increase when he advised "buy" last spring) investors should be flocking to his newsletter and eagerly seeking his advice. And even those who view him as a joker will follow along, for fear of being left out of the action. If it becomes a given that the market will make like a submarine whenever the Moses of Holly Hills whistles, then the most prudent investors will have to follow his advice, or at least react to it.

It would take a man with a big ego to try to manipulate the nation's investors--and every indication is that Granville meets that criterion. He told the Boston Globe in an interview last fall that he would use his "sell signal" sometime this winter, and use it he did. And the thought that he had sent the stock market plunging did not bother Granville; indeed, he seemed to relish the notion that he and his friendly indicators had "read" the market. "It looks like we've done it again. When we call a top right to the day, it's a hole-in-one, an ace." And Granville is supremely confident that he will never be challenged--he told reporters. "If the SEC (Securities and Exchange Commission) ever tried to move against me without grounds I would barbecue them and deep fry them. The SEC is afraid of me because I am so powerful." Just the sentiment one would expect from a well-heeled financier.

It's too easy to poke fun at Granville, though. He's dropped the banker's blue and briefcase in favor of Biblical garb and balloons, and his following has shown that the investment crowd, or at least large portions of it, are just as loony and irrational as anybody else. The next time some Ec 10 section leader explains about the inescapable logic of the market, about the incontrovertible laws of supply and demand, ask him about Granville.