Red flags on market charts and margin debt

Danny Deadlock Danny Deadlock, TickerTrax
1 Comment| February 7, 2014


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Pay Attention to this Market Warning from Louise Yamada
Louise Yamada spent 25 years at Smith Barney (Citigroup) as a top-ranked "Institutional Investor" technical analyst. As Managing Director and Head of Technical Research she was the top-ranked market technician in 2001, 2002, 2003 and 2004, before going independent in 2005.
On Thursday Ms. Yamada did an interview with CNBC in the United States. It is only 4 minutes long but well worth your time.

Using charts and graphs to predict stock market direction is far from an exact science. But some people are far better at it than others and Louise Yamada is one of them.
Professional market technicians can only forecast what they are seeing in charts but we know markets are heavily influenced by investor psychology, economic statistics, etc.
With this particular warning we need to pay attention - keeping in mind this potentially affects everything from your microcap stocks to your pension account. And because of the blue chip correction we saw this past week, this takes on more relevance.
Note in the video it is not just the "charts" that worry her, but the HUGE levels of investor margin debt.
In addition to Louise Yamada I monitor (in the media) dozens of fund managers who oversee billions and market leading economists and strategists – a list I have compiled over the past decade.
Sam Stovall is one from that list that seems to support what Ms. Yamada is warning about. Mr. Stovall is the Chief Equity Strategist for S&P Capital IQ -
He appeared in an interview this week and made the following observations:
> We’ve had 12 bear markets since World War II, and nine have been garden variety, and three have been mega meltdowns. We’ve had 19 corrections, and have had 57 completed pullbacks. I say it that way because I don’t know if this current decline will end as pullback, or morph into something deeper.
> I would tend to say that at best, a down January indicates that investors are going to have a rocky ride and are going to be wrought with uncertainty.
> I think investors do realize that the market is trying to find its footing. We probably will see some sort of a counter-trend rally, but we might find that the decline does end up going beyond the 10-percent threshold to become a correction. If that’s the case, corrections usually take about five months to unfold, and then four months to get back to break-even. So overall, it could be a challenging nine months.

Disclosure: N/A


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Hi Danny, I tried to click on the link above to purchase subscription for $47 but when I go to the page it says its costs $195. Do I need a coupon for the $47 price? Thanks. Mark
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February 7, 2014
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