Stock Market Correction Indicator Flashing A Warning Signal

[cronus]

http://theeconomiccollapseblog.com/arch ... ing-signal

‘Near Perfect’ Indicator That Precedes Almost Every Stock Market Correction Is Flashing A Warning Signal

Are we about to see U.S. stocks take a significant tumble? If you are looking for a “canary in the coal mine” for the U.S. stock market, just look at high yield bonds. In recent years, almost every single time junk bonds have declined substantially there has been a notable stock market correction as well. And right now high yield bonds are steadily moving lower. The biggest reason for this is falling oil prices. As I wrote about the other day, energy companies now account for about 20 percent of the high yield bond market. As the price of oil falls, investors are understandably becoming concerned about the future prospects of those companies and are dumping their bonds. What is happening cannot be described as a “crash” just yet, but there has been a pretty sizable decline for junk bonds over the past month. And as I noted above, junk bonds and stocks usually move in tandem. In fact, junk bonds usually start falling before stocks do. So does the decline in high yield bonds that we are witnessing at the moment indicate that we are on the verge of a significant stock market correction?



(continued)

[pErvinalia]

That's what you get for buying junk.

[cronus]

That's what you get for buying junk.

Like there's a alternative on this planet.

[JimC]

Junk finances?

Next it will be the Dhow Jones Index...

[cronus]

Set for the big correction early next week. Numbers everywhere teetering on the ledge readying to take half a helicopter ride. You can make a fortune if you can guess the splash effect from the body hitting the tarmac.

[pErvinalia]

There's been increased facebook chatter the last few days about global recession. The tail might end up wagging the dog..

[mistermack]

You know what I'd do, in the next recession?
Nationalise every company that has been sold off by previous governments. With piss-poor compensation to the current owners.
That would put the kybosh on future governments trying to sell off the family silver for a pittance.
The markets wouldn't want to know.

Also, introduce an asset tax to replace the reduced levels of income tax. Obviously with restrictions on moving assets abroad.
Use the money to cushion the landing of the recession, by reducing income tax, and maintaining the public sector.

The world has to stop the financial sector from getting rich off bubbles, and then doing a runner with all the bonus money.
The only way is to tax what is bubbling up in value. Just enough to discourage speculative investment in assets.
So that assets just get bought for their intrinsic earning potential, not inflationary bidding up of values.