iPath S&P 500 VIX Short-Term Futures ETN (VXX)

[Pro-Life]

"If you’re like most investors, traders and analysts, then you’re enamored with the strength in the Dow Industrials, the S&P 500, and the Nasdaq and you expect them to simply keep on soaring.

You’d be adding to your stock holdings, chasing hot tips and dreaming of riches.

Yet as always, counting your chickens before they’re hatched is a big mistake. Even more so because all available evidence tells me that U.S. and European stock markets are now a recipe for disaster.

All you have to do is look beyond the illusion of the major indices to see why. Since the August low in global stock markets, the rally that has occurred …

FIRST, has been accompanied by declining volume. When a market rises and volume simultaneously declines, it’s a bearish sign.

SECOND, most stocks traded — both here and in Europe — are actually declining. There are very few leaders pushing the major indices higher. In fact, as I pen this column, here in the U.S. …

Of all publicly traded stocks …

— 44.63% or fully 6,442 are now down at least 10% year-to-date.
— While a whopping 36.9% or 5,204 are down more than 15%.

And only 32.5% are actually up for the year.

Put another way, 77.5% of all publicly traded U.S. stocks are either flat for the year or down more than 10%.

THIRD, of the stocks that are actually advancing, their numbers are also shrinking. Also a very bearish omen.

FOURTH, most other indices are actually down for the year. The Dow Transports are down 10.2%. The Dow Utilities, down 3.5%. The Russell 2000, down 2.5%.

Meanwhile …

FIFTH, total margin buying of U.S. equities — according to latest data (Sept. 30) — stands at a whopping $454 billion, just a tad below record highs.

Given the internally fractured soul of the markets, enumerated above, such massive leverage by investors and institutions is a recipe for disaster. Even the slightest move down can end up causing panic liquidation.

Given the internally fractured soul of the markets, even the slightest move down can end up causing panic liquidation.

SIXTH, earnings expectations are largely being slashed, the dollar is starting to soar (a negative for corporate earnings going forward) and several other indicators I monitor …

All tell me the stock market is about as risky now as it ever gets."

Thank you, jd...

Indices w/stocks above their respective MA200:

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