The stock market has enjoyed a six-year rally, with the S&P 500 tripling since March 2009. But the good times may soon be coming to an end, says
MarketWatch columnist Michael Sincere.
"Most investors nowadays aren't too concerned about the market. This is what happens at market tops," he wrote.
"Conditions are ripe for a bear market."
Sincere sees several signs that the market is overheated.
- Massive amounts of money are going into stock-index funds. "This is dangerous because many investors think they can't lose — another sign of a market top," Sincere explained.
- The market's sharp moves up and down so far this year are another sign of trouble, he noted. "These huge rallies and pullbacks are not healthy, so prudent investors will take some money off the table."
- In addition, the Federal Reserve is "playing with fire by aggressively interjecting itself into the market whenever stocks slide. As in previous corrections, investors will eventually disregard the Fed and this distorted market will return to reality," Sincere claimed.
"Some may believe that 1,000-point rallies and plunges are normal, but they're not. More than likely, it's signaling the end of the bull market," he stated. "Another signal I'm looking for are failed rallies. Even now, the major indexes are rallying but the market internals are incredibly weak."
Meanwhile,
CNBC commentator Jim Cramer said on the air that "he [stock] market is in a weird place. Not a bad place, but a weird place. We are in some sort of new volatility mode, not some sort of crash mode.
"Let's just adjust to the fact that the market has a mood disorder."
He isn't looking for a meltdown in stocks. "There is no systemic failure risk in this country." The stock market has a lot going for it, Cramer argued. "Low interest rates, oil prices, low unemployment, good GDP," he said. Of course, "that is the time things go down."
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