Several serious signs have been reported that may clearly show the path that the US markets are heading down that I am concerned with:
- Bank of America says stocks are headed for a ‘Big Collapse’ and soon. Chief investment strategist for Bank of America, said in a note today that, rather than seeing a long-lasting bull market, the current jump represents a “big rally before big collapse.” He went on to explain the recession and a credit crunch following the Silicon Valley Bank collapse has kept stocks high, but he doesn’t believe it will last.
- The stock market is overbought and due for a correction, says well-known market strategist. “If you subtract 7 stocks out of the S&P 500 (^GSPC), the Apples (^AAPL) of the world, Google (^GOOG), Microsoft (^MSFT), Amazon (^AMZN), etc, the S&P 500 is still only up about 4% year to date.” He believes investors are now chasing the stocks which hadn’t run away like the mega cap names, in hopes they will play catch-up. He says disappointing factory orders, weak industrial production, slower-than-expected retails sales, and stricter lending standards from banks all point to a weaker economic environment. He finished up with this warning, “It’s this dream that everything is going to work out — I just don’t see it happening.”
- A long-time market bear who called the 2000 and 2008 crashes warns the S&P 500 could plummet 64%, bursting a historic bubble. The famously bearish investor said extreme equity valuations and “unfavorable market internals” will trigger the slide. Such a slump will lead to the collapse of “the most extreme yield-seeking speculative bubble in U.S. history,” he said. Stretched equity valuations suggest that the S&P 500 index would be required to plunge of as much as 64% for the market to return to more balanced conditions, according to the asset-bubble expert who successfully predicted the stock routs of 2000 and 2008.
- Markets should brace for a deep US recession that warrants a dramatic one percentage-point interest-rate cut by the Federal Reserve, warned DoubleLine Capital. He based the warning on weakening economic data that makes a recession probable next year. “A multitude of economic indicators we look at are flashing either warning or recessionary signals.”
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note: Remember, I an not a market expert, a stock broker, an economist, or any other kind of financial expert. I am simply passing along some danger signs that influence me.