Dangerous Stock Markets
The comments below are an edited and abridged synopsis of an article by Adam Hamilton
Today’s stock markets are very dangerous. A monster bull has been topping over the past year-and-quarter, leading to extreme technicals, sentiment and valuations. Traders’ euphoria and complacency have been running at bull-slaying levels, while valuations remain at near-perilous bubble territory. All this is happening as corporate profits flatline after surging dramatically on the corporate tax cuts.
As with every past waterfall decline, the stock markets are due to roll over and retest their deep late-December lows. Odds are they will fail, confirming a major new bear market. And the Fed doesn’t have much dovish ammunition left to hold back the heavy selling. Gold investment demand will surge as stocks finally face their reckoning after this artificially amplified bull. That will push gold, and its miners’ stocks, much higher.