"There Are Too Many Warning Signs": Why One Trader Thinks Stocks Are Set To Slide In The Coming Days

From the latest Macro View edition by Bloomberg macro commentator and former Lehman trader, Mark Cudmore

Stock markets look set to continue to slide in the days ahead.

There are too many small warning signs building up at a vulnerable time for markets. Just because a 3% correction hasn’t happened for a long time doesn’t mean that one isn’t possible. Quite to the contrary, it suggests there are a lot of complacent longs that may over-react to a pullback.

It’s also important to emphasize the proviso that the three pillars of the secular bull market remain solid: growth, earnings and liquidity. There’s no obvious reason to turn structurally bearish, but that’s not the same as thinking that every dip needs to be bought instantly.

After a tremendous year of gains, the S&P 500 is particularly vulnerable to profit-taking as Thanksgiving Day and the looming debt-ceiling issue provide further complications to the implementation of a potential tax reform package.

China has been the engine of global growth, but Monday’s disappointing credit data will make investors nervous that the much greater policy focus will now be on deleveraging - and that will weigh on Asia broadly.

Japan has been a bellwether for the most recent equity gains, but last week’s volatile hiccup and subsequent price action look very bearish technically. After a parabolic gain the past two months, a pullback here would only be a healthy consolidation in the grand scheme of things.

European equities are leading the correction already, while U.K. stocks will remain under pressure from domestic politics and Brexit talks.

At this time of year, there are plenty of traders who’ll only need a nudge to take 2017’s profit and move to the sidelines. In contrast, there’s a dearth of reasons for fresh bulls to join in now.

Sometimes in markets you don’t need one headline catalyst to shift sentiment. Equity markets fall just because there are more marginal sellers than buyers.

Comments

stecha Tue, 11/14/2017 - 07:06 Permalink

Mark my word, 15 days after the yuan/renmimbi becomes top world currency the US will start defaulting on credit and the pension plans will self implode almost unstoppable..

Tubs Tue, 11/14/2017 - 06:44 Permalink

Find Lithium/Cobalt/Gold miners outside of the USA, park your cash and wait for the carnage.Current bull run on Australian Junior miners in the Lthium/Cobalt/Nickel space (some below also have huge gold tenements). Check out on ASX these guys under 100M MC, 10X multibag potential (note I hold these and this is not financial advice).ARLCLAPGMSYA

mily Tue, 11/14/2017 - 08:17 Permalink

Yes it could slide, but only after 10AM Wed morning after the VIX option price settlement index VRO price is set at ~<10.50, Yours truly,VIX Futures Spec Net Short team 

wintraiz Tue, 11/14/2017 - 07:13 Permalink

The fact is day after day the analysts at Shepwave keep calling the correct market trades. they dont keep speculating that one day this big crash is going to happen. The markets have quadrupled in the time that this doomsday scenario has been on its way according to one trader and ZH. 

J J Pettigrew Tue, 11/14/2017 - 07:25 Permalink

We always get these predictions...But THEY will get stocks to close on the HIGH OF THE YEAR (all time highs) at the end of the year......We have all seen this....the Santa Clause rally......yipppppeeeee!!!

Rex Andrus Tue, 11/14/2017 - 08:40 Permalink

2:1 short wins. This is a no brainer. ACA wiped out people's disposable income, double digit unemployment for the rest. The holidays are going to be skint for the 99%. Everybody hates AmazionCiaFbiMsm. The false flags will continue until obedience improves. Markets will disappoint but there will be a rally in the basket of FUD, when the sun enters the 7th house and Jupiter aligns with Mars.

Ajax-1 Tue, 11/14/2017 - 08:58 Permalink

 "There Are Too Many Warning Signs": Why One Trader Thinks Stocks Are Set To Slide In The Coming Days"Huh, Since when do fundamentals actually matter?

Honest Sam Tue, 11/14/2017 - 09:14 Permalink

I'm going to go out on a very long limb here to make a prediction:I don't know with any degree of certainty What the fuck is going to happen in the stock market, gold, cobalt, Cocoa, BTC, bonds, interest rates, or the weather by year end. Hopefully, I'll at least be able to use my travel miles to get down to Mexico for some Vitamin D on my skin.Beat that. 

innertrader Tue, 11/14/2017 - 09:16 Permalink

OVER THE LAST 10 YEARS how many bullish vs bearish comments have been posted on ZH?  Come on... someone provide that stat? SETH RICH?TRIUMPH with TRUMP!!!

everything1 Tue, 11/14/2017 - 09:33 Permalink

Sure they might slide a bit and maybe the holiday season will give some more insight to how tapped out the consumer driven economy is .. or isn't. But, the economy does not slow down so quickly, and the economy is a world economy and it's on fire.  Until the easy money train slows down it's going to be full speed ahead.Still, when one easy money train pulls back the reigns hard, it's pretty likely the others will to, it's going to bust but not until we get substantial rate hikes and slow down money creation. 

Obsidian Samctum Tue, 11/14/2017 - 09:54 Permalink

There needs to be punishment for wrong market crash predictions so that the next motherfucker to play chicken little will think about it very carefully before running his mouth.

Punishment should be death or have his assets liquidated.