Zero Hedge:
Is the stock market about to crash? Hopefully not, and there definitely have been quite a few “false alarms” over the past few years. But without a doubt we have been living through one of the greatest financial bubbles in U.S. history, and the markets are absolutely primed for a full-blown crash. That doesn’t mean that one will happen now, but we are starting to see some ominous things happen in the financial world that we have not seen happen in a very long time.
So many of the same patterns that we witnessed just prior to the bursting of the dotcom bubble and just prior to the 2008 financial crisis are repeating themselves again. Hopefully we still have at least a little bit more time before stocks completely crash, because when this market does implode it is going to be a doozy.
The following are 9 ominous signals coming from the financial markets that we have not seen in years…
#1 By the time the markets closed on Monday, we had witnessed the biggest three day decline for U.S. stocks since 2011.
#2 On Monday, the S&P 500 moved below its 200 day moving average for the first time in about two years. The last time this happened after such an extended streak of success, the S&P 500 ended up declining by a total of 22 percent.
#3 This week the put-call ratio actually moved higher than it was at any point during the collapse of Lehman Brothers in 2008. This is an indication that there is a tremendous amount of fear on Wall Street right now.
#4 Everybody is watching the VIX at the moment. According to the Economic Policy Journal, the VIX has now risen to the highest level that it has been since the heart of the European debt crisis. This is another indicator that there is extraordinary fear on Wall Street…
US stock market volatility has jumped to the highest since the eurozone debt crisis, according to a closely watched index, the the CBOE Vix index of implied US share price volatility.
It jumped to 24.6 late on Monday and is up again this morning. On Thursday, it was as low as 15.
That’s a very strong move, but things have been much worse. At height of the recent financial crisis – the Vix index peaked at 80.1 in November 2008.
Could we get there again? Yeah.
#5 The price of oil is crashing. This also happened in 2008 just before the financial crisis erupted. At this point, the price of oil is now the lowest that it has been in more than two years.
#6 As Chris Kimble has pointed out, the chart for the Dow has formed a “Doji Star topping pattern”. We also saw this happen in 2007. Could this be an indication that we are on the verge of another stock market crash similar to what happened in 2008?
#7 Canadian stocks are actually doing even worse than U.S. stocks. At this point, Canadian stocks have already dropped more than 10 percent from the peak of the market.
#8 European stocks have also had a very rough month. For example, German stocks have already droppedabout 10 percent since July, and there are growing concerns about the overall health of the German economy.
For now, I had my financial planner sell everything, and my IRA is now cash.
@Smorgasbord: Like many you panicked–all markets way up today. You still had great profits–congrats.
@Rich Wheeler: #2
First, I admit to not being a stock expert, and let my financial planner do the investing. I know very little about investing.
There is a difference between panic and preparing for a stock crash. I would rather put all of my IRA in cash FOR NOW, and be wrong, than leave it where it was and be wrong. At the worst, I won’t make any money for now. At the best, I will still have my money if the stock market crashes, or just goes down a lot, and can reinvest my money at the lower stock prices. I would do the same if the same thing was going on under a republican administration.