Stocks are rolling over.
As we wrote about earlier this week, the S&P 500 was pushing for a final “kiss” of the broken bearish rising wedge pattern:
The next move should see us drop sharply.
Big picture stocks have effectively gone nowhere since QE 3 ended in November 2014. Yes it’s been a volatile ride, but all things considered stocks have largely traded sideways for 16 months.
Meanwhile, beneath this veneer of stability, the global economy has fallen off a cliff.
Last year (2015) marked the worst year for global trade since the Great Crisis.
The value of goods that crossed international borders last year fell 13.8 per cent in dollar terms — the first contraction since 2009 — according to the Netherlands Bureau of Economic Policy Analysis’s World Trade Monitor. Much of the slump was due to a slowdown in China and other emerging economies.
Source: Financial Times
The US is not immune to this. Wal-Mart, the single largest retailer in the US just posted its first ever drop in year over year revenues since going public 45 years ago.
Stocks are holding up for now… but once they adjust to the economic realities, the bear market is coming back with a vengeance.
Many investors are going to lose everything they’ve accomplished in the last six years.
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