Clive Maund: If THIS Doesn’t Scare You Then NOTHING Will

Wednesday, October 10, 2018
By Paul Martin
October 10, 2018

Clive says that sometimes in life, being alarmed about something is actually healthy, and this is one of those times. Here’s what Clive is talking about…

by Clive Maund of Streetwise Reports

There are times in life when being alarmed is actually a healthy defense mechanism that gives you an advantage over the many for whom “ignorance is bliss.” This is one of those times.

The U.S. stock market is now at a dangerous unprecedented overbought extreme, as the charts that we will look at in this update make abundantly clear, after years of being wafted higher by a combination of QE, ZIRP and stock buybacks, and latterly Trump’s tax bonanza, which has kept the party going by making windfall cash available for still more buybacks. However, with QE having already reversed into QT (Quantitative Tightening) and rates rising, the tide has already turned, and the vice is closing inexorably on the market, which will soon buckle and collapse back into an overdue and very necessary bear market that will serve to at least partially flush out the monstrous excesses of the past decade, before they come riding to the rescue with QE4. The magnitude of these excesses means that the bear market is likely to be anything but orderly, and it should be characterized by at least one big crash phase.

With respect to the timing of the onset of this bear market, which will likely start with a crash phase, because of the continually increasing pressure being exerted by QT and rising rates, we can expect the Republican party to pull out all the stops to prevent it caving in before the mid-term elections in just under a month, since a strong economy is one of the central planks of their campaign. What may happen is that we see wild volatility around the time of the election and then, regardless of the outcome, the market goes down soon after. However, we should keep in mind that October has long been notorious as the month when stock market crashes are most likely to occur, and the Deep State, which controls the Democratic Party, would love nothing better than to bring the market crashing down ahead of the mid-terms in an effort to discredit Trump and the Republicans and reduce their share of the vote.

The chief purpose of this article is to make it crystal clear to you, via the following charts, that the market is at a wild extreme and will soon tip into a savage bear market that will wipe out a lot of leveraged traders, so that you will not only be ready to take steps to protect yourselves, but for good measure position yourselves to turn this situation to your advantage.

We start by looking at a very long-term chart for the S&P500 index that goes all the way back to 1980, which gives us a Big Picture perspective. On this chart you need a magnifying glass to see the 1987 crash, which seems funny now, because it was big deal at the time. You can also see the glorious Clinton years bull market of the 1990s, which ended with the dotcom bust and then Greeny (Alan Greenspan) manning the monetary pumps to get things going again, which led to the property boom and subprime crisis that triggered the 2008 meltdown. After that all pretense at fiscal restraint vanished and we entered the era of full bore QE coupled with about 10 years of ZIRP, which caused debt to skyrocket and enabled massive leveraged speculation, which is what has caused the market to ascend to giddying heights, as stock buybacks rose to unsustainable extremes, kept going more recently by Trump’s tax cut.

The Rest…HERE

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