Is A Stock Market Crash Imminent?

These days we are seeing a great deal of concern about this question:

Is a Stock Market Crash is imminent? 1/30/18

Can I tell you with100% certainly a crash will happen soon or not? Of course I can’t.  Nevertheless, despite many valuation methods and metrics, there are many inputs that suggests a CRASH is unlikely now.

Consider These Indicators

  • Earnings for Q4 are showing a trend for 12% higher revenues and earnings YOY.
  • The Tax Cut has already produced raises or bonuses for over 3M Americans with lower withholding rates to kick in in February brining millions more into new found cash.
  • Apple will be bringing almost all of its $270B in foreign cash back to the US and pay $38B in taxes while hiring 20,000 new workers in the US.  As the US leading company, APPL is likely to set the trend for many other companies.
  • Major economies and minor ones worldwide are all in a SYNCHRONIZED economic expansion for the first time in about 20 years.
  • Inflation is still trending below 2%.
  • Interest rates are finally rising due to the economy growing at 3% for the first time in years.
  • While unemployment is officially low, many potential workers who could rejoin the economy thereby alleviating excessive wage pressures that dent corporate profits.
  • Despite some profit taking these past few days, the overall trend in the stock market is decidedly up.  Usually, the topping process in big bull markets are a process, not an event!  At a minimum, the stock market will need to form a top over months before a real bear market begins.  Could a crash occur without a topping process?  Yes, but probabilities suggest such an event would be an outlier.
  • Most likely volatility, which has been a record lows, will increase and the smooth trajectory of the market will get more bumpy around the time a real top creates itself.

Want To Know More Model/Method (MM), the heart of my newsletter service, has been an excellent tool helping define market trend changes before they become obvious.  Since 2000, the MM has done well by avoiding the two real crashes since the new millennium.

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