Investors have noticed that the stock market has gone through a radical change in the past few months.
Veteran investor Mark D. Cook, who pointed out red flags a year ago, feels vindicated. Finally, stock prices confirmed what he saw in 2014: We’re in a bear market and about to go over the cliff, he says. Here is a chat I had with Cook over the weekend.
Why do you still believe we’re in a bear market?
First, the oil and gas situation is a huge problem, and it will continue. We’re not getting bounces. Instead, oil investors just want to sell. The second problem, and it’s just getting started, is China. China is like an athlete that twisted his ankle and needs time to heal. If the ankle doesn’t heal, it will get worse, and that’s what is happening right now.
Is there anything technical that you are looking at?
Yes. First, every rally in a bear market has no traction. In a bull market, rallies will hold for days or weeks. Now we’re getting sharp “one-day wonders” that fail. Every hope is dashed. That is a strong characteristic of a bear market. Second, the NYSE Tick is registering no institutional activity on the buy side. Every rally is a chance for mutual funds to lighten positions. And this is only January. Wait until people look at their January statements. Many will be shocked.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Craig Erlam
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