The Perfect Storm is Brewing...
Lately, more and more market-doomsday-sayers are hitting the wire and this time round, I am putting one foot in their camp because I think a perfect storm is brewing right now. How so?
1. Stock market cycle, its been 8 years since the last crash and time for another major crash if history is any reference. (Tea party needs to cash out too)
2. Stock market making historical highs with little to no fundamental economic backing. Tower built on paper foundation is largely unsustainable.
3. Interest rates can't go any lower, the only way is up but raising interest rates now when the economy is not ready is again catastrophic.
4. Hindenburg Omen... always a bad thing to hang over our heads
5. NYSE margin debt at a low and possibly turning upwards. Market jumps through the window whenever that happens.
One thing different about this is that the previous stock market crashes has been the result of an overheated economy so all it did was bring the heat back down to normal levels and wash out some of the toxins accumulated in the process. However, if a market crash happen in such a cold economy, what would the result likely to be?
I would think that the pieces are not yet in place for the crash to happen in the short term. However, I do think the tail end of 2015 and 2016 is going to be dangerous. There should be one final run before the steam run out, probably riding on the Asian stock market boom.
All in all, this is the time to be extremely nimble, take profit on profitable long term or mid term positions and be extremely nimble for short term opportunities.
1. Stock market cycle, its been 8 years since the last crash and time for another major crash if history is any reference. (Tea party needs to cash out too)
2. Stock market making historical highs with little to no fundamental economic backing. Tower built on paper foundation is largely unsustainable.
3. Interest rates can't go any lower, the only way is up but raising interest rates now when the economy is not ready is again catastrophic.
4. Hindenburg Omen... always a bad thing to hang over our heads
5. NYSE margin debt at a low and possibly turning upwards. Market jumps through the window whenever that happens.
One thing different about this is that the previous stock market crashes has been the result of an overheated economy so all it did was bring the heat back down to normal levels and wash out some of the toxins accumulated in the process. However, if a market crash happen in such a cold economy, what would the result likely to be?
I would think that the pieces are not yet in place for the crash to happen in the short term. However, I do think the tail end of 2015 and 2016 is going to be dangerous. There should be one final run before the steam run out, probably riding on the Asian stock market boom.
All in all, this is the time to be extremely nimble, take profit on profitable long term or mid term positions and be extremely nimble for short term opportunities.
posted by Jason Ng at 9:21 PM
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