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Trading Lessons

US Stock Market Getting Scarier by the Day

Stock-Markets / Stock Markets 2015 Apr 17, 2015 - 05:37 PM GMT

By: Clive_Maund

Stock-Markets

The giant bearish Rising Wedge in the S&P500 index shown on its 8-year chart below is now closing up rapidly and looks set to force a breakdown soon. While an upside breakout is possible, it looks highly unlikely, for a variety of other reasons that we will look at shortly. The top line of this Wedge is certainly of importance as the index has retreated from it on several occasions. Note the non-confirmation of recent new highs by the Dow Jones Transports at the top of the chart.


The long-term 20-year chart shows that we are at a good point for the market to reverse, from a cyclical standpoint, as the market has been rising for 7 to 8 years now, without even a significant correction for the past several years. The gap between the 2000 and 2007 peaks was of course 7 years. We know that the Fed has been intervening on Wall St's behalf to prop the market up in recent years, but these manipulative forces may soon be overtaken by reality. The rising dollar has sucked foreign capital into the US, but once the dollar starts to tumble, this flow could reverse and send the dollar lower still, forcing the Fed to raise rates, thus crashing the stockmarket.

All normal indicators are showing excess optimism in the market which is clearly a warning...


Chart courtesy of www.sentimentrader.com

Margin debt is at very high levels, showing that investors are max leveraged, similar to the situation at the 2000 and 2007 peaks, another bad sign...


Chart courtesy of www.sentimentrader.com

NYSE available cash is close to record lows - better print up another few trillion pronto!...

Chart courtesy of www.sentimentrader.com

Equities as a percentage of GBP are very high...

Chart courtesy of www.sentimentrader.com

The InsiderScore Buy/Sell ratio shows that Insiders are doing much more selling than buying now...

Chart courtesy of www.sentimentrader.com

Conclusion

The Fed has been goosing the market for years now with QE and heavy intervention every time it looks like it's going to drop at the behest of their masters on Wall St, creating massive distortions, which means that if they lose control for whatever reason this whole thing will blow up in their faces. The biggest threat to this enormous Ponzi scheme will be a self-feeding dollar collapse involving a reversal of capital flows, that only a significant rise in rates could halt. The closing up of the giant bearish Rising Wedge shows that we could be very close to this happening.

By Clive Maund
CliveMaund.com

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© 2015 Clive Maund - The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

Clive Maund Archive

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