by Clive Maund, GoldSeek:
There are various reasons, both fundamental and technical, to believe that a market crash is almost upon us. This crash will affect virtually all world markets, including and especially the big Western Markets which have thus far escaped the devastation already afflicting the developing markets. Here we are going to focus on US markets, but they will all get taken down – European markets including the UK, and Far Eastern markets such as Hong Kong and Japan.
The fundamental reasons for a market crash now are big and obvious – the ravages of deflation and depression brought about by extremes of debt which must cut into corporate profits – in Japan the debt situation is now hopeless, the Sovereign debt crisis set to crush Europe and probably destroy the euro, the collapse and implosion of the monstrous debt fuelled bubble in China which is already underway, an accelerating currency crisis in the Far-East exacerbated by the recent Chinese devaluation of the Yuan, and the collapse also already underway in Emerging Markets.
Given that US markets have been driven to giddying heights by the combination, among other things, of maxed out margin debt and stock buybacks, it is clear that a crash of perhaps unprecedented proportions in on the cards. So much for the fundamentals, since we are more concerned with timing, we now turn to consider the latest charts.
We’ll start with the 10-year chart for the S&P500 index, on which we see a very bearish setup, where after a multi-year bullmarket, the index is now breaking down from near the apex of a giant bearish Rising Wedge, having been capped by a large Distribution Dome. It is now in position to plunge, and this is made more likely by the rapidly weakening Emerging Markets, shown at the top of the chart, and the Volatility Index, or VIX, shown at the bottom of the chart, which has been at a low level for a long time, indicating a high degree of complacency, makes it unlikely that the market will drift lower – it is much more likely that it will plunge, as immediately it becomes clear that the game is over and the trend has changed there will almost certainly be an almighty stampede for the exits.
Please follow SGT Report on Twitter & help share the message.