a) Firstly a massive rising wedge is forming on the long term S and P 500 chart. This is much bigger than that observed in 2000 or 2008 and just a matter of time before it breaks to the downside with profound consequences. A major bear market could ensue post the break. Chart courtesy of StockTwits.com:

b) Secondly Margin Debt is at record levels and has eclipsed levels seen during the maniacal peaks of 2000 and 2008. Once the above rising wedge breaks you could have a rush for the exit triggered by margin calls. Chart courtesy disqus.com:

c) Thirdly despite multiple dosages of Quantitative easing (QE) from global central banks the velocity of money is below the levels observed during the Great Depression. This implies that changes in money supply will have little impact on the economy going forward. Further QE's are likely but won't really stimulate the global economy. Chart source armstrongeconomics.com.

The above developments taken together with ongoing bear markets in several key asset classes make for a deflationary collapse increasingly likely in the not too distant future.

By Rajveer Rawlin

rajveersmarketviews.blogspot.in
http://www.linkedin.com/pub/rajveer-rawlin/3/534/12a

Rajveer Rawlin received his MBA in finance from the University of Wales, Cardiff, UK. He is a Associate Professor in Finance in the Department of Management Studies Acharya Bangalore Business School. His research interests includes areas of Capital Markets, Banking, Investment Analysis and Portfolio Management and has over 15 years of experience in the above areas covering the US and Indian Markets. He has 9 publications in the above areas. The views expressed here are his own and should not be construed as advice to buy or sell securities.

© 2015 Copyright Rajveer Rawlin - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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