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...
Technical strategist Abigail Doolittle is holding tight to her prediction of market doom ahead, asserting that a recent move in Wall Street's fear gauge is signaling the way.
Doolittle, founder of Peak Theories Research, has made headlines lately suggesting a market correction worse than anyone thinks is ahead. The long-term possibility, she has said, is a 60 percent collapsefor the S&P 500.
In early August, Doolittle was warning both of a looming "super spike" in the CBOE Volatility Index as well as a "death cross" in the 10-year Treasury note. The former referenced a sharp move higher in the "VIX," while the latter used Wall Street lingo for an event that already occurred in which the fixed income benchmark saw its 50-day moving average cross below its 200-day trend line.
Both, she said, served as indicators for trouble ahead.
The Dow dropped precipitously after a historic intraday high of 17,350 only three weeks ago, losing some 1,500 points.
After an intraday loss of 460 points Wednesday, traders were relieved when a late-day rally mitigated the damage, with the Dow losing 173.45 points on the day to close at 16,141.74.
According to the Wall Street Journal, traders attributed the day’s wide swing in both stock and bond markets to hedge funds looking to exit money-losing investments.
“Wednesday’s dismal trading had the hallmarks of forced selling by managers who were pressured to unwind risky bets that were losing money fast,” the Journal reported.
On Wednesday, the S&P 500 fell 15.21 points, or 0.8 percent, while the Nasdaq declined 11.85 points, or 0.3 percent, to 4215.32.
The Wall Street Journal further reported that in the current stock market selloff, investors have flocked to government bonds with the yield on the benchmark 10-year Treasury note dropping to 2.091 percent on Wednesday, from 2.206 percent late on Tuesday. It fell briefly below 2 percent for the first time since June 2013, with bond yields falling as bond prices rose.
Despite the marked downturn in the last three weeks, market professionals were unsure whether the current trend reflected a temporary market adjustment or the beginning of a major stock market collapse.
Earlier this month, International Monetary Fund and World Bank officials in semiannual meetings in Washington warned global growth was slowing and central bank loose monetary policies in the European Union and the United States could lead to financial excesses that might prompt a return to a worldwide recession.
WND has reported an end to the Federal Reserve’s Quantitative Easing policy of purchasing U.S. Treasury debt could lead to an increase in interest rates that would prompt a stock market collapse.
The VIX, a widely watched market index generally interpreted as a measure of fear, has spiked recently in both the European Union and the United States. It could mean the days of stock market indexes hitting record highs on a regular basis may be over, at least for a while.
Global central bankers, eager to see the economystand on its own feet, faced the rude reality this week of market turmoil threatening already faltering growth and prolonging world reliance on easy money.
Stocks slumped again on Wednesday pushing S&P 500 losses to almost 8 percent since mid-September. The dollar fell and U.S. bond prices soared after weak Chinese inflation and U.S. producer price and retail sales data fanned fears the worldeconomy could be even weaker than thought.
But the deepening of the sell-off may have put major central banks on their heels, by raising the prospect of the market rout going too far too fast, threatening to hurt confidence and potentially triggering a pullback in spending.
"It reminds me of the massive flight to quality we saw during the (2008) banking crisis, when there were fears that the whole global economy would tip into depression," said Nick Stamenkovic, a strategist at Edinburgh-based RIA Capital Markets.
Economists familiar with central bank policymaking say there is no doubt that officials are worried by the markets' sharp turn for the worse. It is less clear how and when will they respond.
Over the past week investors have pushed back their expected date for an initial Fed rate increase from next summer to late in 2015 or even into 2016.
Ever since the financial crisis hit six years ago, central bankers have been at the forefront of a campaign to save the global economy, slashing rates to zero and pumping trillions of dollars into the world economy via unconventional policies such as buying vast amounts of government debt.
At meetings of the International Monetary Fund last week, central bankers appeared content that their mission was largely over and called on governments to do their part to boost demand and job growth by investing in infrastructure.
A former commander of the British Army’s chemical and nuclear weapons protection forces has warned that the Islamic State in Iraq and Al-Sham (ISIS) has the capability of making battlefield dirty bombs.
It emerged that hundred of shells filled with poison gas are stored unguarded in areas controlled by the jihadists.
Hamish de Bretton-Gordon, a former colonel, issued the warning after it was found that two large stockpiles of shells filled with mustard and sarin gas had not been made secure, either under the American occupation or when Iraqi forces controlled the areas north of Baghdad before this summer.
Mr. Bretton-Gordon said ISIS had shown it was determined to use chemical weapons in Syria and its advance in Iraq had put dangerous material within the group’s grasp.
“These materials are not as secure as we had been led to believe and now pose some significant threat to the coalition in Iraq fighting ISIL,” he said, using another acronym for the terror group.
“We know that ISIL have researched the use of chemical weapons in Syria for the last two years and worryingly there are already unconfirmed reports that ISIL has used mustard gas as it pursues its offensive against the Kurds in Kobani.
“They certainly have access to the Al-Qaeda research into chemical weapons and will want to use the legacy weapons in Iraq.” ISIS seized the Muthanna State Establishment, where Iraqi chemical agent production was based in the Eighties, this summer.
The New York Times reported Wednesday that last year, two contaminated bunkers there containing cyanide components and sarin gas rockets as well as other shells had not been encased in concrete and made safe.
Iraqi officials added that an army base near Saddam Hussein’s home town of Tikrit, which fell to ISIS during the same lightning offensive, housed a shipping container “packed with chemical shells”.
All told, the Iraqi government has estimated that about 2,500 chemical shells were stored within ISIS territory, but it has never admitted that the bunkers had not been put beyond use.
The allegations that ISIS could access chemical-filled munitions heightens concern over use of the weapons, either in Iraq or Syria. “If in Kobani”.
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