NO, markets do not crash in modern times since there are measures in place to prevent it but the market can drop a few % points as the FED et al engineer a soft landing. Exceptions are rare e.g. major geopolitical event. Do not depend on a CRASH (defined by me as market dropping more than 5%) to make profits.
Did The Fed Just Set The Stock Market Up For A Crash? 11-05-21
By Lance Roberts | November 6, 2021
Market Back To Extreme Overbought
As noted last week, the more significant concern remains the underlying technical condition of the market. While the rally has been impressive, rising to all-time highs, the market is now back to more extreme overbought levels.
Furthermore, our “money flow buy signal” is near a peak and slightly triggered a “sell signal.” However, with the MACD still positive, the signal suggests a consolidation rather than correction. However, a confirming MACD often aligns with short-term corrections at a minimum. Therefore we will watch that signal closely. Also, this entire rally from the recent lows has been on very weak volume, which suggests a lack of commitment.
Currently, the bulls control the market as we are in the middle of a “buying stampede.” Historically, buying stampedes last on average between 7 and 12 days. Logically, buying stampedes always get followed by selling stampedes of similar lengths. However, there are times these stampedes can last much longer than expected.
We are currently in one of those longer-term periods. As shown below, the S&P 500 has only been down in 2 of the last 18 days. How unusual is that? In the previous 20-years of the S&P 500, the number of times the market accomplished such a feat was precisely ZERO.
Of course, that stampede gets driven by exuberance.
Irrational Exuberance
In our daily market commentary (click the banner below to subscribe for FREE morning delivery), we quoted a piece of analysis from Chartr.com. To wit:
“Every week it feels like we get a new headline about financial markets doing something unusual. Just this week we’ve had:“
- A “squid game” crypto token falling 99.99% in a few minutes.
- Tesla adding hundreds of billions of dollars in value over a deal with Hertz that hasn’t even been signed.
- US stock markets hitting fresh all-time-highs.
“All of which begs the question: are we in a bubble?”
https://realinvestme...-crash-11-05-21