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Chris Martenson & Walter Zimmerman: We’re Heading Toward A 40% Correction Within The Next Few Months. Every Indicator I Follow Shows The Market Is Going To Tank, And There Will Be A New Financial Crisis


Warning: Stocks Likely To Crater From Here

from Chris Martenson:

I don’t relish the job of constantly pointing out the risks to the equity markets. But since few on Wall Street seem willing (or able) to do this, I’m “making the call” for a market correction, as enough variables have aligned to indicate a high likelihood of stocks heading downwards from here.

I’ve only given one other such warning about equities before, and that was in March of 2008, when I warned of the possibility of a 40% to 60% decline in stock prices by Fall. I am making a similar call today, with the understanding that I am usually a bit early to the game with my views.

Before I get into the details, the broad outline is that I see a case where speculative fevers, propelled by the Fed’s $85 billion thin-air money printing program, have more or less run their course, with the Dow and S&P indexes stalled near their all-time highs. That is, $85 billion a month is what it takes to merely keep the Dow near 14,000 and the S&P 500 near 1,500.

Danger Ahead

Technically stocks are overbought. Fundamentally, the picture is even worse: they are facing a litany of economic drags (including weakening GDP growth, higher taxes, the impact of Obamacare, sequester cuts, high gasoline prices, chronic unemployment, etc.) and robust insider selling.  We explore these fundamental risks and their likely impact in great depth in Part II.

For all of these reasons, equity markets face a very high chance of falling over 40% between now and fall of 2013.  (Yes, I’m aware of how extreme a price prediction this is.)

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WALTER ZIMMERMAN: Every Indicator I Follow Shows The Market Is Going To Tank, And There Will Be A New Financial Crisis

The stock market is within points of hitting an all-time high.

However, there is no shortage experts who are waving red flags. Earnings expectations have been falling, profit margins appear to be unsustainably high, and sentiment is so high that it seems investors are being complacent about the risks.

“Every reliable technical tool is warning of major peaking action,” said Walter Zimmerman, the senior technical analyst at United-ICAP. “This includes sentiment, momentum, classical chart patterns, and Elliott wave analysis.

“Most of the rally in the stock market since 2009 can be chalked up to the Federal Reserve’s attempt to create a ‘wealth effect’ through higher stock market prices. This only exacerbates the downside risk. Why? The stock market no is longer a lead indicator for the economy. It is instead reflecting Fed manipulation. Pushing the stock market higher while the real economy languishes has resulted in another bubble.

“The next leg down will not be a partial correction of the advance since the 2009 lows. It will be another major financial crisis. The worst is yet to come.”

 

 

Byron Wien: I’m ‘Suspicious’ of This Rally

 

 

Biderman’sDaily Edge: U.S. Entered Recession in January Yet Fed Fix Keeps Stocks Pumped – Stock Insider Selling is now 50 to 1 and Bailing

 

 

PREPARE For 90% Correction? Currency War Escalating But Inflationary Targets Will Fail – World Stuck In Deflationary Super-Cycle And There’s A “Financial Catastrophe On The Horizon

Jens Weidmann warns of currency war risk

Inflationary Targets Will Fail – World Stuck In Deflationary Super-Cycle

Stock Market Will Be Blindsided

BILLIONAIRES DUMPING STOCKS, ECONOMIST KNOWS WHY!

So why are these billionaires dumping their shares of U.S. companies?

After all, the stock market is still in the midst of its historic rally. Real estate prices have finally leveled off, and for the first time in five years are actually rising in many locations. And the unemployment rate seems to have stabilized.

It’s very likely that these professional investors are aware of specific research that points toward a massive market correction, as much as 90%.

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  • h5mind

    Since three out of four Americans have little or nothing saved for a rainy day (it rains pretty much all the time these days), and half of us own no stocks, dire predictions of market failures hold little of the Bogeyman impact they once had. As always, the wealthy elite responsible for the manipulation of our banks, money supply, laws, and economy, will all have long since since cashed out and fled to the Caymans prior to you or I noticing our ATM card no longer works, and soldiers are guarding all the supermarkets and gas stations. The best we can do is to keep our wits about us, realize these economic failures have occurred in many countries, and we are no exception.