The Market is Soaring in March 2016, But Stay Cautious of a Slump Ahead

It seems that suddenly the market headlines are no longer talking about the potential downside that could happen when stocks soar too quickly.

MarketWatch had a great article on 3/17/16 about the how the next financial crisis could be caused by Energy Companies defaulting like dominoes:
Energy sector defaults could go like dominoes - MarketWatch

The domino effect of one mutual fund - MarketWatch
"Markets roll over and die because the financial system finally tires of the evil twins: leverage and poor liquidity. That is what investors should be on the lookout for into 2016. Seven years into a bull market that eventually sprung from that financial agony, the signs are there again that investors will not be able to get away with investing in just anything."

When could the next market drop happen?

Look for the next market drop when the DOW approaches or breaches 18,000.

The 52-week high for the DOW is 18,351.40.
The peak in November 2015 was 17,977.The recent steep climb from Feb 11, 2016 to early March 2016 is about the same slope as the rapid rally from October to the first week of November 2015.

The 52-week high for the the S&P 500 is: 2,134.72



More articles about potential market downside in 2016:

I Still Fear A Big Market Decline Ahead | Kiplinger

5 — and only 5 — things that pose a greater global risk than a Donald Trump presidency - MarketWatch

Predicting the next stock market crash

Back in mid January, we predicted that the Stock Market Plummet Will Arrive By May 2016.


Here are some things that predict the upcoming market correction/crash:

Margin debt is reaching astronomical highs.  This happened right before the crashes in 2001 and 2008.

We are overdue for a correction based on moving averages.  The last two crashes happened seven years apart.  It could have easily happened in 2015, but was delayed a little bit, probably because of market manipulation and other factors keeping things propped up in the short term.
If history rhymes this indicator suggests stocks still have a long way to fall

The low price of oil is hurting the economies in many countries, including Russia, the U.S., and the OPEC nations in the Middle East and South America.

European banks are under pressure and some could fail in the next year. [Add news links here.]

One of the only Quants to predict a big market dip is saying that we are "in the ninth inning of a nine inning game" and that bear markets have rarely lasted over 7 years, meaning that we are overdue for a correction.

Quant Master Kolanovic makes a Long-Term (and Bearish) Prediction