On October 17 I wrote a post titled “Danger Signs In The Stock Market, Financial System And Economy.” This post is a brief fourth update to that post.
My overall analysis indicates a continuing elevated and growing level of danger.
I continue to believe the October 4 1074.77 low on the S&P500 will not be a “lasting bottom”, and the dynamics as described in the October 20 post (“Thoughts On The Next Stock Market Decline“) and the likelihood of longer-term substantial “downside” still apply.
Furthermore, as I mentioned in that October 17 post:
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 elaboration on this "next crash" was subsequently addressed in the post of January 6, 2012 titled "The Next Crash And Its Significance.")
Predicting the timing and extent of a stock market crash is always difficult, and the immense complexity of today's economic situation makes such a prediction even more challenging. That being said, my analyses indicate that the danger inherent in the financial system has reached a level at which a stock market crash - that would also involve (as seen in 2008) various other markets as well - has reached a level at which a near-term crash is (at least) a significant concern.
As reference, below is a 1-year daily chart of the S&P500, indicating both the 50dma and 200dma:
(click on chart to enlarge image)(chart courtesy of StockCharts.com; chart creation and annotation by the author)
The Special Note summarizes my overall thoughts about our economic situation
SPX at 1292.08 as this post is written