The Stock Market - Increasing Risks And Potential Implications

| About: SPDR S&P (SPY)

In the last few months I have written many posts concerning what I perceive as to be significant, and growing, stock market risks. These posts have included the articles on November 21 ("The Stock Market - Elevated And Rising Risks") as well as that of December 20 ("Stock Market Risks Continue To Grow".)

My overall analysis indicates a continuing elevated and growing level of danger.

I continue to believe the October 4 1074.77 low on the S&P500 will not be a “lasting bottom”, and the dynamics as described in the October 20 post (“Thoughts On The Next Stock Market Decline“) and the likelihood of longer-term substantial “downside” still apply.

Furthermore, as I mentioned in that October 17 post:

Of further concern is whether, and when, the above-mentioned problems might reach a point at which another (financial system) crash occurs. I am particularly concerned about the prospects of the next crash for a number of reasons, of which I will elaborate upon shortly.

(The elaboration on this "next crash" was subsequently addressed in the post of January 6, 2012 titled "The Next Crash And Its Significance.")

Predicting the timing and extent of a stock market crash is always difficult, and the immense complexity of today's economic situation makes such a prediction even more challenging. That being said, my analyses indicate that the danger inherent in the financial system - 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.

As reference, below is a 1-year daily chart of the S&P500, indicating both the 50dma and 200dma:

(click on chart to enlarge image)(chart courtesy of; chart creation and annotation by the author)

The S&P500 is at 1292.08 (the January 10 close) as this post is written

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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