The Coming Bear Market

The bears are dead. Long live the bears. And that, in a nutshell, describes every bubble and emerging bear market there ever was. There is no doubt that the recent market environment has been unrelenting in terms of its unidirectional focus. Yet it is precisely the very market environment bears wanted: Exuberant markets, markets highly stretched above historic moving averages, complacency everywhere and capitulation toward the upside at a time when stocks are the most expensive in many years.
Consider: Not only is the $NDX on its 9th year of consecutive up, but also on its 7th consecutive up week in 2017 (in fact it hasn’t had a single down week in 2017 as of this writing) and on it’s 9th consecutive day up in February.
Yet I’m calling for a coming bear market here at $SPX 2351. This market, while perhaps still going higher, is setting up not for a correction, but a major bear market. And mind you this can grind around for a while. Tops are processes and not events.
And let’s be upfront: I’ve not liked the structural backdrop of markets for quite some time, but have been cognizant of its technical apex potential. The blow-off top scenario if you will (see Media). The reason why is plain: The entire global financial system is 100% dependent on central bank intervention and debt expansion and low rates. There is zero evidence that markets can organically support current assets prices anywhere in the world without any of these things. I’ve outlined my structural concerns in detail in the Market Analysis section in the past and you can read up on them there.

This post was published at Zero Hedge on Feb 17, 2017.