2/23/2015 – Another mixed day with the Dow Jones down 24 points (-0.13%) and the Nasdaq up 5 points (+0.10%).
The stock market continues to behave as forecasted. If you would like to find out when and where the market tops out next, please Click Here.
Two relevant views of the stock market in today’s daily update.
- A Stock Market Alarm Is Sounding for the First Time Since 2007
- The Fed is worried about what happens when everyone rushes for the exit
Despite recent higher highs, the market continues to flash a red warning light in various metrics. Today, lets take a quick look at margin debt. As the charts below suggest, long-term margin debt is at an all time high. Higher than at 2000 and 2007 tops. Short-term, margin debt has peaked last year and is now rolling over. That brings into question the validity of today’s rally and the ability of this market to push any higher.
On the flip side, this also raises the question if the liquidity can disappear overnight, just as it did back in 2008. Making the Fed very worried. From January’s FED Minutes.
“Finally, the increased role of bond and loan mutual funds, in conjunction with other factors, may have increased the risk that liquidity pressures could emerge in related markets if investor appetite for such assets wanes.”
Luckily, we do not have to guess here. We just have to look at the most recent sell-off in September-October of 2014. Despite a moderate decline of just 1,500 points on the Dow, the liquidity did dry up at that time. That is to say, should a larger 10-20% sell-off develop over the next few months, it would be wise to anticipate the liquidity to vanish and declines to accelerate. This does not bode well for the overall market.
This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2014/15-2017. 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 2014/15-2017 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. February 23rd, 2015 InvestWithAlex.com
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