Market Crash Likely Isn't Going To Happen Anytime Soon

The market bear is confused.  Is the crash on the horizon?Many people believe that a market crash is just around the corner.

Meanwhile, the markets continue to tick higher on a seemingly daily basis.

Companies such as Amazon, Facebook and Google seem to have impossibly high valuations.

Surely the market implosion is just around the corner? After all, we are eight years into the bull market, and it is "mature" to say the least.


Here are the problems with the "imminent market crash" theory from somebody who has been trading for almost 20 years and has practically zero long exposure to the market at this moment:

1) There is way too much money on the sidelines

2) Everybody is half expecting a crash to take place at any moment

3) There is no real "euphoria" in the markets right now


Dips are bought at every opportunity in this market.

In order to get to the point where the markets are ready to take a real tumble, in my opinion, we'll need to get the cash that is currently on the sidelines close to fully invested.

We are not even close to that.

In order to start a true bear market, we will likely first need that euphoric "melt-up" that adds 20-30% to the market. That "melt-up" where people feel compelled to jump in and get fully invested. That "melt-up" that takes the values of companies like Amazon and others up another 40-50%+.


You can certainly make a compelling argument that the market is overvalued - I'm not disputing that.

What I'm saying is that the bulls still have plenty of ammunition left in their war chests and that the market likely won't roll over until they have started blazing.

With tax reform possibly looming on the horizon, there is plenty left that could buoy these markets.

If you are looking at the short side of the market right now, be careful out there. As the old saying goes, the market can keep rising much longer than you can stay solvent.

Filed under: General Knowledge

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