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Stock Market ‘Crash’ Coming Very Soon! Why?

March 30, 2014

Let’s take a look at the PE ratios of the major stock indices in the U.S.A. Key ratio’s now suggest that we are entering a huge BUBBLE in many markets (especially in the Russell 2000) which is about to deflate soon! Go to: for evidence. The biggest BUBBLE is in the Russell 2000 index. As of 3/28/2014 this index showed a PE of 74.80. Last year at this same time the index was at 34.88. This index should be around a 19 PE if it were fairly valued. Even the NASDAQ 100 and the Dow Index are excessive at 21.15 and 15.89. This means that at some point traders are going to recognize this bubble mania and start selling these markets SHORT. I would not be surprised if the beginning of a sell-off (led by the Russell 2000) is imminent.  When the mob of traders become AWARE of this bubble mania, I think the CRASH mentality (which many of us perceive) will materialize!

The Average PE for the Russell 2000 has been in the range of around 25 up until late 2012. During 2013 this index sky-rocketed to a PE of 52. During 2014 it has reached 74.80 as of March 28. What is the message! Bubble! Bubble! Bubble! This index could be the catalyst that sets off a market crash SOON!

Now is the time to look up at the electronic exchanges and watch the coming crash develop. Practically all of our stock exchanges are now electronic. Remember the ‘flash’ crash of May 10, 2010? What happened is that 900 point drop developed in milliseconds as trades activated their algorithmic software and executed their short strategies. Now that our markets are mostly electronic and global in nature, we could witness a global market crash mentality starting soon among our global trading community. All it takes is for our HFT computers (in coordination or following a lead seller) to execute their algorithmic formulae and change their strategy from Long to Short. Personally, I sense that this type of strategy will begin some time in 2014. Now is the time to prepare for this coming event!

Most of our Stock and Bond markets are now electronic and our currencies are ‘digital’. This means that computer trading sets off changes in ‘prices’ and ‘trends’. Considering that we now have some 70% of all volume within our electronic markets executed by Algorithmic Trading and High Frequency Trading, a change in sentiment can change ‘prices’ in milliseconds! A new trend in motion will then continue until it ends!

A picture is worth a thousand words! Note the ‘digital’ nature of the NASDAQ. This is now ubiquitous globally!

The CME Globex Electronic markets are now trading Futures and Equities via the computer. Where are the trading floors with all the Open Out-Cry traders? The entire world is now transitioning to electronic markets and computer trading! This reality has changed ‘money’, ‘currencies’, and our trading strategies!

Soon our manipulated computer markets will start their trend towards a Bubble Burst. I sense that this ‘burst’ will happen sometime in 2014 and maybe very soon. The key to a change in trend is ‘sentiment’, ‘confidence’, and the reality that our economy is not improving and will not likely improve given the nature of our situation. Our Keynesian Debt Economy has reached a threshold level where the masses are becoming aware that our economy can not improve. The system has reached its final end game and this awareness is growing daily. 2014 is likely the beginning of the end game! Any crash will likely be a long gradual process which starts with a bang and then proceeds gradually downward for many years. Deflation is coming! Asset ‘values’ will decline during this coming deflationary period! The best hedges for this new market environment will be the basics of life (food, oil, gas, precious metals, and items which maintain a high barter value). Watch and stay alert! I am:


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