The five-year bull market for stocks is in trouble, says money manager John Tobey.
"The seemingly non-stop stock market rise looks like it is ending,"
he writes on Forbes.com. The S&P 500 and Dow Jones Industrial Average hit record highs Friday.
"Ever-weakening fundamental factors combined with ever-worsening technical risks appear to have finally grabbed hold," Tobey says.
Editor’s Note: New Warning - Stocks on Verge of Major Collapse
As for the fundamentals, existing home sales fell 1.8 percent in August, he notes. Meanwhile, "since early July, retail indicators and company comments have been pointing to coming disappointment and weakness," Tobey writes.
This back-to-school shopping season has been the worst for retailers since the recession ended in 2009, according to Bloomberg.
On the technical said, the Russell 2000 index' 50-day moving average traded below its 200-day moving average Monday for the first time in more than two years.
"Technical analysts call that move a 'death cross,' and it’s a very bearish signal," according to Yahoo.
Meanwhile, though many investors are worried that when the Federal Reserve finally raises interest rates, stocks will tank,
MarketWatch columnist Howard Gold says fear not.
History suggests that while stocks will suffer in the short run, they will rebound in the long run, he writes.
Looking back to 1946, in 13 of the 16 instances when the Fed lifted rates, the S&P 500 index endured a decline of at least 5 percent — 16 percent on average — in the six months before the hikes began, Sam Stovall, S&P Capital IQ equity strategist, told Gold.
But within six months after the first rate increase, the S&P 500 "was back in the black and up an average 1.3 percent," Stovall wrote last week.
Editor’s Note: New Warning - Stocks on Verge of Major Collapse