As yours truly, David Stockman and Mohamed El-Erian continue to warn their followers that a big stock market decline and a severe recession are coming down the pipeline.

David Stockman: 

• “The worldwide central bank money printing spree of the last two decades has generated massive excess capacity and mal-investment all around the planet.”
• “What is coming, therefore, is not their father’s inflationary spiral, but an unprecedented and epochal global deflation.”
• “So the central banks just keep printing, thereby inflating the asset bubbles worldwide. What ultimately stops today’s new style central bank credit cycle, therefore, is bursting financial bubbles. That has already happened twice this century. A third proof of the case looks to be just around the corner.”

Mohamed El-Erian: 

• Financial markets have grown addicted to central bank easing, and that addiction could cause a heap of trouble when central banks tighten the credit spigot.
• “It reminds me a little bit of 2007 and 2008,” when investors tried to discern when the turn would come away from easy credit conditions, El-Erian said. “I’m not so confident that I will see the turn coming, and turns tend to happen quite quickly.”

I couldn’t agree more. The only remaining question is…….are the US Equity markets currently going through a 9 month distribution or consolidation period? If distribution, the time to pay the piper may be soon at hand.

Stockman and El-Erian: Get Ready For A Bear Market Google

4/30/2015 – A big down day with the Dow Jones down 196 points (-1.09%) and the Nasdaq down 82 points (-1.64%).

The stock market continues to behave as forecasted in our subscriber section. Are we about to bounce to new all time highs -OR- is this sell-off just getting started? Click Here to find out.

Marc Faber has been off of his game over the last few years. So much so that the talking heads within the financial media community now openly laugh at his “Bear Market” forecasts. Now, more bearish than ever, Marc expects a rapid 40-60% decline. Has he gone insane?  Let’s take a look.

“For the last two years, I’ve been thinking that U.S. stocks are due for a correction,” Faber said Wednesday on CNBC’s “ Trading Nation .” “But I always say a bubble is a bubble, and if there’s no correction, the market will go up, and one day it will go down, big time.”

My Comment: Oftentimes the best researched bears are too early to the party. I am guilty of the same…..at least I used to be. I remember shorting sub-prime lenders in early 2006 and then wondering how these clearly bankrupt companies can surge higher. By the summer of 2008 they were worth ZERO.

“The market is in a position where it’s not just going to be a 10 percent correction. Maybe it first goes up a bit further, but when it comes, it will be 30 percent or 40 percent minimum!” Faber asserted.

My Comment: Bingo. Most investors have assumed, wrongfully I might add, that we are in a new secular bull market. As a result, everyone believes that every 10-15% correction will be recovered.  Nothing to worry about – buy the dips. It will be interesting to watch as a 10% correction turns into a 20%, 30%, etc…..

Faber says low yields and stimulative central bank policies around the world have led to a condition in which “all assets are grossly overvalued … and eventually this will unwind and cause some problems. Look at the market since November of last year to now. The market is up 2 percent. It hasn’t done much, and a lot of stocks are breaking down. I don’t think that the market is in a healthy condition.”

Despite his massively bearish call, Faber said he’s “not short the market yet,” since he doesn’t know how high stocks could go in the interim. Still, he makes clear that “I’m not interested to buy momentum, I’m interested to buy value.”

My Comment: He is absolutely right. Buying now would be a suicide mission. At the same time, Marc is too scared to go short. And not only Marc. Every single bear I know, except yours truly, is scared of this market. Do I smell an opportunity? That’s why it helps to know exactly when the top is due.

In conclusion, NO,  Marc Faber is not insane. In fact, he might be the only sane person in this insane asylum we call the stock market.

This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years.  If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.

(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. April 10th, 2015  InvestWithAlex.com

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Marc Faber Expects A 60-40% Decline. Is He Insane?  Google

This should not come as a surprise to the followers of this blog, most retail investors are fully invested on margin and extremely bullish.

Bad sign? Retail investors all in: TD Ameritrade

A broad look at the 6.5 million customer accounts at TD Ameritrade indicates that retail investors are “pretty fully invested” in stocks, the online brokerage’s CEO said Thursday.

Fred Tomczyk cited several signs of this: margin loans at high levels, client cash at low levels and account holders at the firm logging in frequently. “It’s usually a good indication that people are very engaged in the markets and watching their investments closely,” he said.

So, while there are net capital outflows from the institutional side, retail and corporates (stock buybacks) are fully committed to this “apparent” market rally. Just as they were at 2000 and 2007 tops. Some things never change and most people don’t learn from the past.

Another bull trap is now in place.

Ameritrade CEO Confirms A Bull Trap Google