Strains in global financial markets continue to pose significant downside risks to the economic outlook. - FOMC Statement of January 25, 2012
On October 17 I wrote a post titled "Danger Signs In The Stock Market, Financial System And Economy." This post is a brief fifth update to that post.
My overall analysis indicates a continuing elevated and growing level of danger.
My views of this danger, and its implications regarding the financial markets and economy as a whole, were last discussed in the article of January 12, 2012, titled "The Stock Market - Increasing Risks And Potential Implications."
In that article, I said :
...my analyses indicate that the danger inherent in the financial system has reached a level at which a stock market crash - that would also involve (as seen in 2008) various other markets as well - has reached a level at which a near-term crash is (at least) a significant concern.
Additionally, since that January 12 update, several new factors have been added to a rather long list of problematical fundamental, technical analysis, and other considerations.
Currently, the overall situation is somewhat reminiscent of the days leading to the "Flash Crash" of May 6, 2010. I wrote of that situation on April 19, 2010, in "S&P500 at Extremes - Technically and Fundamentally." While now and then share certain similarities, my analysis indicates that our current economic and financial situation is of far greater peril.
As reference, below is a 1-year daily chart of the S&P500 (SPY), indicating both the 50dma and 200dma:
(click on chart to enlarge image)
(chart courtesy of StockCharts.com - annotation by the author)