A Bear Market In US Stocks Looms…Indeed A Déjà vu 2007-2008

Indubitably, current US stock market topping pattern is fueled by unbridled greed and unrealistic Stock Buy-Back schemes fueled by the Fed’s Negative Interest Rate Policies (i.e. Quantitative Easing).  However, as it did in 2001-2003 and again in 2007-2008, Irrational Exuberance will slowly morph into fear and panic as stocks begin to crash. Only this time, the Dow Index and S&P500 Index may well suffer more severe losses. Moreover, it is highly probable that global stock markets will accelerate and exacerbate their prevailing bear market trends…especially in China.

Here below are listed many Fundamental and Technical indicators heralding an on-coming Big Bear Market in US Stocks.

Baltic Dry Index

The Baltic Dry Index (BDI) is an economic indicator issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea countries, the index provides "an assessment of the price of moving the major raw materials by sea.

The index indirectly measures global supply and demand for the commodities shipped aboard dry bulk carriers, such as building materials, coal, metallic ores, and grains.

SOURCE:  http://www.investmenttools.com/

Because dry bulk primarily consists of materials that function as raw material inputs to the production of intermediate or finished goods, such as concrete, electricity, steel, and food the index is also seen as an efficient economic indicator of future economic growth and production. The BDI is termed a leading economic indicator because it predicts future economic activity.

Nightmarishly, the Baltic Dry Index (BDI) is at an all-time low.

With a view to put the BDI into perspective, plotted are two charts:

BDI vs the Bloomberg Commodity Index and BDI vs Commodity Research Bureau Index (CRB).

Obviously, the BDI runs in tandem with both the Bloomberg Commodity Index (BCOM) and the Commodity Research Bureau Index (CRB). Clearly, demand on average for all commodities is falling dangerously…implying hard economic times are brewing on the horizon…as world trade volumes relentlessly decline.

Leading Economic Indicators

Economic indicators are among the most closely watched pieces of news in the investment world. Practically every week there is some announcement that affects investors' predictions about the future of the economy. Leading indicators are those which are believed to change in advance of changes in the economy, giving you a preview of what is going to happen before the change actually occurs. (There are also coincident indicators, which change about the same time as the overall economy, and lagging indicators, which change after the overall economy, but these are of minimal use as predictive tools.) In addition, the Fed watches many of these indicators as it decides what to do about interest rates.  Among the Leading Economic Indicators closely watched is the Producer Price Index (PPI…shown here with the BDI super-imposed).  It is imperative to tale particular notice that the PPI materially declined in 2001 and 2008, indicating stocks were sure to drop.  And since 2014 to the present, the PPI is in a lethal dive…which is a precursor to a new BEAR MARKET IN STOCKS.

Here following are more charts showing Technical Indicators that strongly suggest a Bear Market in US stocks is brewing.

Bearish Triple Top In Dow/US Bonds (1998-Present)

The Bearish Triple Top above is confirmed by the Full Stochastics Technical Indicator, which suggests the Dow Index may decline more than it did in the two previous BEAR MARKETS.

Bearish Double Top In NASDAQ Composite Index (1996-Present)

The NASDAQ Index has formed a Bearish Double Top pattern, where red arrow indicators signal each decline.

US Bank Index Is Already In a Bear Market…as it was in the 2007-2008 bear market.

Transportation Index As A Leading Indicator To US Stocks

NYSE MARGIN DEBT At An All-time High

One of the primary causes of the dramatic 1929 Crash in US stocks was the NYSE Margin Debt.  Hapless investors were allowed to buy equities with only 5% margin (where the brokerage house lent the innocent, naïve investor the other 95%) to speculate in stocks.  And once the market peaked, Brokers began calling in the loans, which forced these ignorant speculators to dump equities au masse…thus forcing stock values even lower…which created an avalanche of selling and MORE MARGIN CALLS.  The rest is history as the DOW Index tumbled -89% from peak to trough.  However, we all know today’s PERCENT maximum margin allowed is NO where near 95%. Nonetheless, too many speculators have run up the NYSE Margin Debt to record levels (see chart above).  Needless to say, record levels coincided with the beginning of the 2000-2003 and 2007-2008 BEAR MARKETS.  And recently the NYSE Margin Debt is again at an all-time record high…which may well lead to a major selloff in US equities.

And Finally The New York Stock Exchange Composite Index

The NYSE Index is unquestionably the Leader of Wall Street’s band. And today the NYSE Index is hell bent for leather in the death throes of a new BEAR MARKET. In the past the 20-month MA has been the all-important resistance…which has again been punctured.  And just it occurred in 2001 and 2008, it recently released hordes of bears into Wall Street. Soon it will be a situation of KATIE-BAR-THE-DOOR as the raging bears come marauding into US stock market. 

FINANCIAL GOSPEL Forecasting Dire Times Ahead -

All the above extreme signs of impending financial danger demand that one be:

Conservative, Careful, Prudent AND WISE…in order to preserve your hard earned wealth…and a life-style you have come to enjoy.

If history is testament, then the above charts indubitably suggest the global economy is edging toward another recession…which eventually may plunge into another 1930s like GREAT DEPRESSION.

The above Bear Market Indicators are the writings on the wall…heralding another horrific decline in stock prices…where a raging Bear Market may give birth to a Global Recession, which could finally morph into another 1930s GREAT DEPRESSION.  In this event Central Banks worldwide will be forced to sharply devalue their currencies in order to alleviate the inevitable and protracted plunge into ECONOMIC DEPRESSION.

Related Research:

Death Crosses Across The Board Are IRREFUTABLE Stock Market Sell Signals

Financial Armageddon Looms On The Horizon As The EURO UNION IMPLOSION Nears

Derivatives Crisis Of Banks…Worldwide

Bankrupt Banks Brutally Bleeding…Worldwide

Shanghai Stocks Sink: Déjà vu 2001 & 2007…All Over Again