k_denninger

Is This the Start of a Bear Market?

I believe there is a significant chance we are about to see "down a lot."

The 200DMA, as mentioned, is a good marker.

Take a look at the Russell 2000. That would be the definition of "down a lot" starting, and when one major index rolls over like this, the others <b>usually</b... (but not always) follow.

Therefore, I believe it is prudent to take protective steps. But then again, I thought that was true a while ago. Now it appears that we may be facing exactly the scenario that I believed was coming.

Valuations are actually quite expensive, if you take out the radical underperformers since January. Remove the financials from the S&amp;P and you'll find that the overall P/E is quite high. On the Nasdaq its even worse.

Reality is that there has been a big LBO "PUT" on the market for the last year or two. This is disappearing. Therefore, you must now go back and re-evaluate what is a rational valuation for the market <b>without</b... that PUT.

When I do that, I find myself staring at a 20-30% downward adjustment from where we are now.