Stocks Perfectly Poised to Plummet Past Point of No Return

Stocks Perfectly Poised to Plummet Past Point of No Return by David Haggith – The Great Recession

We are now well into the year when I said stocks would plunge in January and would prove to be a gaping “crack” in the economy by summer, and look at how seriously the market has fallen apart since it started to drop in the last week of January:

It was just three months ago that stock-market investors were being swept up by a euphoria pinned to the idea of economic expansion taking hold harmoniously across the globe—a dynamic that hadn’t occurred since the 1980s, and one that was expected to extend into 2018.

However, less than midway through the year and some market participants are already spotting cracks in the notion of so-called synchronized global growth, with some fearing that a whiff of stagflation is starting to permeate. Stagflation is typically described as persistently high inflation and high unemployment, combined with weak economic demand….

“The problem is that there have been macro forces that have been clouding the outlook, so it’s preventing the investor from taking the good earnings news and running with it,” Young told MarketWatch….

Economic growth in the U.S. has tapered a tad, with the first-quarter gross domestic product, the official scorecard for the economy, coming in at the slowest pace in a year owing to a big pullback in consumer spending. (MarketWatch)

Dow down relentlessly in spite of good news

Even though corporate earnings reports posted lots of good news last week and this, the market fell again and again along the relentless downward trend line I noted in last week’s article:

Dow continues down precisely along new 2018 trend line.

It’s not hard to see that each bounce up has become weaker than the bounce before. What happens when the collapsing ceiling and the floor meet? If the market breaks through that floor, typically the floor collapses. From there, it now has a long way to fall without any obvious support. In my view, its a fall that eventually leads back to the bottom of the Great Recession and maybe even further.

As you can see below, the Dow has now broken below its 50-day moving average, its 100-day moving average and its 150-day moving average:

There is not much floor left. What used to be support beneath the market has become the ceiling. The market has inverted, and is now sitting right on its 200-day moving average (often regarded as the ultimate floor):

Dow settling on its last line of support, the 200-day moving average.

2018 Dow settling on its last line of support, the 200-day moving average.

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David Haggith

Knave Dave — vigilante against the false profits of The Great Recession Too many criminal CEOs still fill their porky bellies with the biggest taxpayer bailouts in the history of the world. These bailouts protect their reputations, saving them from the fall they should have taken. They continue to receive bonuses for having done an unparalleled job of destroying their companies! Many of their companies wouldn’t be making any profit at all if not for the interest they’re making off of nearly free government bailouts. Just this week Hewlett-Packard fired its CEO, but is still paying him a bonus of millions of dollars in exchange for a year of corporate wandering in the wilderness. Netflix’s CEO cost his company hundreds of thousands of subscribers and had to reverse his decision. Bank of America’s CEO launched a debit-card fee plan that was immediately stupid in the eyes of many, but greed an arrogance led him to think he could pass it by his customers, and he lost customers in droves and had to reverse his decision, as did the many major banks that followed him. Since these corporate leaders do things most of us can immediately see as being dumb, why are they rewarded with salaries a thousand times greater than many of us make?