Monday, October 17, 2011

Danger Signs In The Stock Market, Financial System And Economy

In recent posts concerning the stock market, such as those of October 10 and September 29, I have commented :
…the stock market “price action” feels very “unsettled” to me, and, as such,  I think the “danger” here is rather high.
In this post I would like to list a variety of areas that I see as signs of significant and increasing danger not only in the stock market, but to the overall financial markets and economy as well.  While, unfortunately, the complete list is very long, and would include both apparent and non-apparent aspects,  this summary list includes many major areas.  I have included links for those areas I have previously discussed in this blog:
  1. High price volatility in the stock market (The S&P500 is currently at 1224.58)
  2. Highly depressed and rapidly falling consumer confidence
  3. Many signs of pronounced economic weakness
  4. Signs of stock market weakness and danger seen in various technical analysis measures
  5. ECRI's WLI Growth readings as well as ECRI's September 30  Recession statement 
  6. Continually worrisome trends in median household income, as well as numerous signs of broad-based financial strain among households
  7. Elevated financial system stress levels, seen in many measures including the VIX, various CDS spreads, and other metrics such as the STLFSI.
  8. Poor financial stock "price action" and fundamental questions regarding the financial viability of various institutions
  9. Various manifestations of recent "deflationary pressures"
  10. Other "problem areas" that I have frequently written of;  a list can be found in a Seeking Alpha article of January 10 titled "10 'Front and Center' Problem Areas That Pose a Threat to the Economy."
Of further concern is whether, and when, the above-mentioned problems might reach a point at which another (financial system) crash occurs.  I am particularly concerned about the prospects of the next crash for a number of reasons, of which I will elaborate upon shortly.

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1224.58 as this post is written

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