The Big One

This afternoon, with the good ole boys running the White Knuckle Highway at Talladega Superspeedway, Dale Earnhardt Jr. won the checkered flag. At Talladega, where pack racing is prevalent, drivers are always weary of the "big one", a wreck that usually collects much of the field and radically changes the dynamic of the race.

With regard to the stock market, those in the know seems to think the big one, in the form of a stock market crash, is imminent.  I agree.

No matter the horrendous that hits the news cycle, with the recent reporting of the GDP numbers which find the economy has grounded to a halt, the stock market continues to rise. Nothing seems to be able to take it down, and even a healthy correction has no chance of gaining friction.

It is up, up and away!

Not so fast may friend.

Fueled by free money, the stock market appears to be on parabolic rise, which never ends well for an individual stock or any of the indices. In fact, a chart of the S&P 500 reveals a rising wedge technical pattern, which is considered bearish.

The numbers of market analysts who are sounding the alarm bells is growing, and while much of the noise from these folks is self serving and often incorrect, the basis of caution is sound.

With the media will continue to sing the praises of the market and the economy, the time to protect your investments is now.  Looking back at the crash of 2008, it seems like a theft, as the transfer of wealth was staggering.  This time, the current valuations are based on far less tangible assets than in 2008, with the fundamental basis for trades seemingly based on less and less reality, which will make the next crash much worse.