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These 5 Conditions Mean The Market Is Going To Plunge
Started:March 11th, 2012 (06:43 PM) by kbit Views / Replies:238 / 0
Last Reply:March 11th, 2012 (06:43 PM) Attachments:0

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These 5 Conditions Mean The Market Is Going To Plunge

Old March 11th, 2012, 06:43 PM   #1 (permalink)
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These 5 Conditions Mean The Market Is Going To Plunge

There's a big story in Barron's this weekend titled The Worst of Times to Buy Stocks?, which highlights the gloomy warnings of well-known investor John Hussman and technical guy Walter J. Zimmermann Jr.
Hussman's bearishness is well known, but the article by Randall W. Forsyth boils down Hussman's bearishness to five criteria:
the Standard & Poor's 500 trading at more than 8% above its 52-week exponential moving average
the S&P 500 up more than 50% from its four-year low
the "Shiller P/E," based on the cyclically adjusted trailing 10-year earnings, developed by Yale economist Robert Shiller, greater than 18; it's currently 22
the 10-year Treasury yield higher than six months earlier
the Investors Intelligence's bullish advisory sentiment over 47%, and bearishness under 25%; in the latest data, the numbers were 47.9% bulls and 26.6% bears
Apparently all those conditions are nearly in place now, as they were in 1987, 2000, and 2007.
Meanwhile, Zimmerman agrees with all that, plus he cites the inevitability of a market decline owing to rising taxes, austerity, too much bullishness, and gas prices. He sees a "perfect storm" manifesting itself within days.
Read the full story here >

Read more: HUSSMAN: These Four Conditions Mean The Market Is Going To Plunge

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