Tuesday , 19 March 2024

This Metric Strongly Suggests a Major Correction in the S&P 500 Could Be Coming (+2K Views)

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History shows that when investors experience a rapid decline in the amount of available cash in their brokerage account to spend/invest quickly such “negative net worth” leads to major corrections in the stock market. Currently such is the case so can we expect another such decline or will it be different this time?

So writes Chris Kimble (www.kimblechartingsolutions.com) in edited excerpts from his post* entitled Cash levels in Brokerage accounts approach lowest levels in history!

This post is presented compliments of www.munKNEE.com (Your Key to Making Money!) and may have been edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.

Kimble goes on to say in further edited excerpts:

Negative Net Worth is defined as the amount of cash available to spend/invest quickly i.e. the net credit balance in one’s account consisting of free credit cash and credit balances in one’s margin account less one’s margin debt minus margin debt.

The chart below, created by Doug Short, reflects such a rapid decline in available cash/net worth this past month.

CLICK ON CHART TO ENLARGE

As can be seen in the chart above there were very few times over the past 13 years where negative net worth dropped as low as at present without a major drop in the S&P 500 following shortly thereafter. Will it be different this time?

Editor’s Note: The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.

*http://blog.kimblechartingsolutions.com/2013/03/cash-levels-in-brokerage-accounts-nears-lowest-levels-in-history/

1. I’m “making the call” for a market correction of 50% – or more!!

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. Words: 1203; Charts: 6

2. Watch Out For Falling Stocks! Here’s Why

The stock markets make no sense. They have literally lost touch with reality. Divergences between fundamentals, confidence and the valuation of markets are large [and, as such,] cannot last for long….The only  question is how…and how quickly….this correction occurs. Words: 261

3. You Need to Stay in the Stock Market Despite an Impending Economic Collapse – Here’s Why

You need to stay in markets despite an impending economic collapse. [Really?! Yes, really.] Normally such an expectation would be addressed by getting out of the way of the oncoming disaster and taking ones chips off the table [but,] in this situation, there is no place to hide. Low-risk assets, like bonds and near-cash, produce little to no return…and the threat of rising interest rates and inflation make them dangerous.  Higher risk assets are unavoidable, given current conditions. [Let me explain further.] Words: 830

4. You Can Insure Your Portfolio From Potential Capital Loss – Here’s How

Most everything you’ve heard about investing from the mainstream media, your mutual fund advisor and your tax accountant is a lie. You’ve been told…that the entire point of portfolio diversification is to mitigate downside risk yet when the market experiences the inevitable decline, every sector pushes significantly lower – and your “diversified” portfolio suffers as a result, [right? Well, there IS a better way.] Hear me out. Words: 895

5. The U.S. Stock Market Is Overvalued By More Than 50%! Here’s Why

Key stock indices are becoming significantly overpriced. The value of the U.S. stock market stands at about 133% of GDP. The average for the past 60 years has been around 82%. By this measure, the U.S. stock market is overvalued by more than 50%! Words: 398

6. Stop! Don’t Forget Market Risk – Remember What Happened in 2000 & 2007/8.

Investors are more bullish now than at any time since 2002 but the current rally has not been fueled by improved prospects of actual growth and wealth creation. Instead, it’s mostly due to:

  1. investors desperate for income denied them elsewhere by central bank policies;
  2. printed stimulus cash seeking a home and
  3. sheer technical momentum

but nowhere do they seem to be considering market risk – the risk that your investment will lose value because it gets dragged down in a falling market. Words: 615

7. Insider Trading Suggests That a Market Crash Is Coming

What you are about to read below is startling. •Every time that the market has fallen in recent years, insiders have been able to get out ahead of time… •[What] is so alarming [this time round is] that corporate insiders are selling nine times as many shares as they are buying right now. •In addition, some extraordinarily large bets have just been made that will only pay off if the financial markets in the U.S. crash by the end of April. •So what does all of this mean? [Could it be that they] have insider knowledge that a market crash is coming? Evaluate the evidence below and decide for yourself. Words: 570

 8. This False Stock Market Bubble Will Burst, Major Banks Will Fail & the Financial System Will Implode! Here’s Why

At some point we are going to see another wave of panic hit the financial markets like we saw back in 2008.  The false stock market bubble will burst, major banks will fail and the financial system will implode.  It could unfold something like this: Words: 660

9. Ignore Wall Street Cheerleaders: Market Technicals, Fundamentals & Other Info Says Otherwise!

[In spite of what] the typical Wall Street cheerleaders, I mean strategists, are predicting, we see the equity market ever more closer to its cyclical top, miners about to retest a major bottom and hard assets with a new catalyst. [This article analyzes 9 pieces of information, complete with charts, that show what is actually going on in the marketplace at this point in time and what the short-term future holds.] Words: 930; Charts: 8

10. 5 Sound Reasons Investors Would Be Better Off On the Sidelines Than In the Market

New year festivities have continued on the stock market even as the Christmas trees have been put away. The “death of the fiscal cliff,” not horrible job numbers and supportive comments from Mario Draghi on the other side of the pond have led to bold and bullish behaviors over the last three weeks. While no one can predict the exact peak, here are five reasons you’re better off on the sidelines than in the market.

11. These Charts Suggest a Possible +/-60% Decline in the S&P 500 by 2014

J.P. Morgan Asset Management has developed a chart showing the past two cycles in the S&P 500 highlighting peak and trough valuations. At face value it is very alarming as it suggests a potential decline of somewhere in the vicinity of 60% over the next year or two and concurs with previous innovative trend analyses included in this article. Charts: 4

12. Don’t Ignore This Fact: “Greedometer Gauge” Signals S&P 500 Drop to the 500s by July-August, 2013!

< noscript>”stock-market-tsunami”The S&P500 is likely to achieve a secular (long term) peak this month, then drop to the 500s by July-August 2013. This article explains why. Words: 180

13. Current Market Overvaluation (from 33% – 51%!) Suggests Cautious Long-term Outlook

< noscript>”investing3″Based on the latest S&P 500 monthly data, [my analyses indicate that] the  market is overvalued somewhere in the range of 33% to 51%,  depending on which of 4  indicators I used. This is an increase over the previous month’s 31% to 48% range. [Let me explain the details.] Words: 475

14. Goldman Sachs’ Leading Indicators Signal Steep Market Crash Ahead

Goldman Sachs reports their Global Economic Indicators (GLI) show the world has re-entered a contraction and…is predicting a market crash worse than that of the early 90′s recession and one slightly less than the sell-off at the turn of the millennium. [Below are graphs to support their contentions.] Words: 250

15. Will a Black Swan Event Cause the S&P 500 to Drop by 40%?

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< noscript>””Mark Spitznagel…warned the other day that the S&P 500 could lose 40% of its value in the next couple of years. So what black swan event could cause the S&P 500 to drop down to 760? [Let’s take a closer look.] Words: 856

 

One comment

  1. I’m reminded of the expression “running on empty” and if that is indeed the case why not “step on it” while you are at it? What do you have to loose? it is like buying a Lotto ticket with your last “Buck”. I believe that the only ones still concerned with planning ahead are the ones that are at least financially comfortable and/or the ones with connections to someone who is. The rest of Society is now living paycheck to paycheck or credit card statement to credit card statement, watching what is left of their savings dwindle, with no end in sight, thanks to our dysfunctional Congressional Leadership that is doing far more for their own wealthy political donors than they are for all the American people they represent!