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History Repeating Itself: Market Collapse Signs

|Includes: DIA, QQQ, SPDR S&P 500 Trust ETF (SPY)

As the market trades near 52 week and multi year highs, the media continues to pump an economic recovery that has every retail investor turning into a bull. Strange and scary coincidences are emerging in comparison to previous market mega drops. The SPDR S&P 500 ETF (NYSEARCA:SPY) is trading at $134.21, -0.36 (-0.27%).

First, the volume over the past few months has continued to get lighter and lighter. Not only does this mean the institutions are no longer buying but it also is the lightest volume since 1999. This was just prior to the technology bubble collapsing.

As if that was not ominous enough, the top of the market during the real estate market occurred in 2007. The top was nailed perfectly by the IPO of The Blackstone Group L.P. (NYSE:BX). This IPO to the real estate bubble is what Facebook is to the social media bubble. The markets rallied up into the IPO debut of Blackstone and collapsed soon after. We all know where they went following 2007.

So here the markets sit, gently floating higher day after day, ignoring European issues and allowing the retail investor to jump back in the market and the highs. History has a way of repeating itself and these commonalities are far too scary to ignore. Beware of the next few months in this market.

Gareth Soloway