The Everything Everywhere Crash

photo credit: Getty


The long-term bubble set off by QE in the U.S., Europe and Japan has been called the ‘bubble everything.’ Now, however, as the punch bowl is being taken away, it looks like we are in the ‘crash everywhere.’

2019 is going to be the year of market routs; at best it will be the year of bear drudgery. Few are crying ‘crash’ but it is everywhere you look.

The U.S. is going to ‘get it’ in. I wrote a while back that the U.S. and German markets were twins and that the U.K. and France were similarly but differently welded together. France and the U.K. will not escape this crash but Germany is showing the way.

The future of the U.S. market is likely shown in the following chart.

likely future of U.S. market

Quantitative tightening, or reverse-QE as I like to call it, is the mother of this contraction and the tide of money is leaving the global periphery but it is fast drying up in the U.S. core too. Germany, however strong its economy, cannot shrug off this tide and it is showing a trailer of the market to come in the U.S.

Here is the Dow and Dax together:

The Dow and the Dax compared

Credit: ADVFN

The Dax is down 21% from its high. That would be nasty in the U.S., but this is likely just the beginning of this slump not the final moments, so a lot worse is to come for both the U.S. and Germany.

The following chart shows the potential for a Dotcom Crash 2:

The Dow, the Dax and the Nasdaq

Credit: ADVFN

Many will look back at the trillion dollar valuations of Amazon and Apple and point to them as the market top, but right now this bear move is early so there is still time for the bearish to cover their positions and sit out the future.

I’m 85% in cash now and I will guarantee you I will not be calling the end of the world if the market halves, I will be buying.

We all know that to sell at the top and buy at the bottom is the way to invest and trade but few can leave the party early or be one of the first to arrive. When the market is high people feel elated and look forward to even more bounty to come, they then ride the crash to the floor, coining every lost paper profit as real, grimly holding on for a miracle, then they sell at the bottom sure the world, like their portfolio, is finished. They then sit on the sidelines groaning about the tragedy of it all and watch the bitter show of a long slow recovery. This is why most people do not last more than a single boom bust cycle.

So the call for investors is simple: is it going to fall a lot or stabilisz at these levels? You can miss out on the fat zone between these outcomes as it is not going to happen.

I believe we are in for a crash or a grinding bear, so as the current correction has unfolded I first sold my unloved shares, then as the market confirmed my theories I sold my liked stocks and now finally I am unloading my conviction shares. All the time I’m holding back from buying any new candidates.

So unless you are a perma-bear or a ‘buy and hold’ it’s a good idea to at least do some housework on your holdings.

The rule should always be, if you wouldn’t buy the stock today, why are you holding it? It’s a very tough attitude but in tough times it suddenly seems less onerous.

Good luck to all investors and traders and remember if you don’t know which direction the market’s heading you shouldn’t be in it.


Clem Chambers is the CEO of private investors Web site and author of Be Rich, The Game in Wall Street and Trading Cryptocurrencies: A Beginner’s Guide.


Clem Chambers Clem Chambers Senior Contributor

