Signs of Impending Market Crash

I came across the link to this EXCELLENT SUMMATION of all the warning signs indicating another market crash. It's very readable to the layman, as well as the Technician.

Warning signs of impending market crash

Also, I get these emails from Stocktiming.com from time to time and they often include free charts. I'm currently contemplating a test subscription and will provide my review in a future post whether it's worth the money.

Anyhoo.. Marty Chenard brings up a VERY IMPORTANT point that helps us to analyze why the markets have performed they way they have. It has to do with "liquidity" in the financial system.

Do we have enough Liquidity in the system?

What's apparently from that chart is that the Fed was adding cash liquidity to the system at a breakneck past from March, 2009 up until April, 2010. They would drain ever larger amounts of liquidity, then ramp it up.. then drain even more.. Like weaning an Meth addict off a 12 month bender.. You can't do too much, without giving them a temporary fix.. but then you give them less and less.

However, just before the "Flash Crash" the Fed drained a ton of liquidity with the result that the market crashed. We've been fluctuating in "contraction" territory ever since then. But Chenard is telling us we're currently close to neutral and there are indications that the Fed is going to expand the money supply again based upon lagging economic data concerns.

No good "bringing down" the patient from his "addiction" if the result is that the patient dies as a result.

I don't know where Chenard gets his data on liquidity, but it does seem to show definitive correlations to market performance..

Can it be that easy? And doesn't that suggest that all market moves are "manipulated" by the supply of money in the system?

I'll have to do more reading on the subject and report back.

But in the meantime, be sure and read that article on "Warning Signs"..

And for your viewing pleasure, here's PSA's latest video on "exhaustion gaps".. It's a good lesson for aspiring Technicians to remember.

Exhaustian Gaps = Bear Market

Scrutinizer