This rally looks complete.
The S&P 500 has broken the rising wedge pattern that has sustained it throughout the bounce from the February lows.
This is hitting as new evidence suggests corporate profits are collapsing at a pace not seen since the 2008 meltdown.
 
This type of collapse does not occur outside of recessionary periods.
The US data has yet to show a recession hitting because:
1) Most of the initial data points are too high and will be revised down in the near future.
2) Recessions are usually announced when they’re already close to over for political purposes.
Regarding #1, consider the collapse in the Fed’s GDPNow measure. That initial great reading for 1Q16 of 1.4% is now showing a growth pace of only 0.6%.
This will likely be revised even lower in the coming months.
Regarding #2, recessions are usually announced towards their end. The reason? The aforementioned revisions and because there is considerable political pressure to portray the economy in the best light possible.
Consider the 2007-2008 meltdown. The recession was only announced in December 2008 once the entire economy was completely imploding.
The National Bureau of Economic Research said Monday that the U.S. has been in a recession since December 2007, making official what most Americans have already believed about the state of the economy…
Source: CNN MONEY (December 1, 2008)
What does this mean?
Stocks are a mere 4% off their all-time highs at a point in which corporate profits are collapsing at a 2008-pace. The economy is very likely already in a recession, though it won’t be announced until next year at the earliest.
Buckle up, a crisis is coming.
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