M&A Activity, Margin Debt and Volatility.....All Point To A Bear Market?

11/2/2015 – A positive day with the Dow Jones up 165 points (+0.94%) and the Nasdaq up 73 points (+1.45%)

UBS believes so. In their recent note to their clients

Signs are accumulating that, after 6 1/2 years and price gains of more than 200%, the Bull Market has entered into the “Late Innings.” M&A activity — as revenue growth stays challenged — has been feverish, and the announcement of talks between Pfizer (PFE) and Allergan (AGN) is reminiscent of deals such as AOL/Time Warner in 2000 and RBS/ABN-AMRO in 2007, blockbusters in market leading sectors which were followed by major market tops.

Just a small correction here. What 6.5 years? The NYSE, largest index by capitalization, has topped out in July of 2014. That is 5.5 years into its bull cycle.

2015 is on schedule to become a record breaking M&A year. With 22% increase in global transactions year over year. Yet, as you very well know, we typically see this type of a surge in M&A at the tail end of bull runs. We saw the same thing happening at 2000 and 2007 tops.

In terms of margin debt, we have talked about it before. Margin Debt Monstrosity & Fed’s Achilles Heel And while it appears margin debt is rolling over and on the way down, it is still 33% above 2007 and 50% above 2000 bubble level highs. Not a good sign as we are already sitting at bubble level valuations. And should margin debt continue with its downtrend, the stock market will follow.

Finally, long-term volatility is sitting at its cycle lows. And while it is incredibly hard to believe that VIX will see 50+ levels again, that is exactly what the history is telling us. When we combine these 3 data points, we get yet another confirmation point that serious market trouble might be just around the corner.

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. Noveber 2nd, 2015 InvestWithAlex.com

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