Facebook (FB) is the sixth nail in the 2009 Bull Market’s coffin. Its shares posted their steepest drop since 2015 as U.S. and European officials demanded answers to reports that it provided the data of millions of its users to political consulting firm Cambridge Analytica. The event is yet another nail to be pounded into the coffin of the bull that died in January 2018 for the following reasons:
- Facebook which has a monopoly on the lives of global consumers will come under increased governmental scrutiny.
- That governments will attempt to increase regulations, taxes and fees from all of the FANG (acronym for Facebook, Amazon (AMZN), Netflix (NFLX) and Google (GOOGL) stocks.)
The revelation about Facebook has put a damper on all of the FANG stocks. The FANG stocks are the leaders of Technology, the sector which had been supporting the market for the past few months.
Last week $3.3 billion flowed into the PowerShares QQQ Trust Series 1, the biggest exchange-traded fund tracking the Nasdaq 100 index, on speculation the group would continue its market-beating run. It was at a rate that had not been seen since the height of the dot-com bubble. See chart below:
The chart below further accentuates that cash had been flowing into the Technology sector of the market at a record rate. Now all of those bulls will also go to the sidelines and due to the Technology sector no longer leading the markets the probability of a major decline in the markets for 2018 has increased.
Facebook’s nail follows the 5th nail which was the departure of Gary Cohn and Rex Tillerson from the Trump cabinet since the first of March. Both had been the only remaining proponents for Free trade and against the tariffs in the Trump administration. With each additional nail the probability increases that the market will not get back to its January 2018 all-time high anytime soon. Read my February 28, 2018, “Another Nail Pounded into 2009 Bull’s Coffin” article to see the three first nails. See also “Tariff Is 4th Nail in 2009 Bull’s Coffin; Trade Wars Do Not Go Well with Markets”.
The chart below which depicts the stock market’s bubbles since 2007 is based on the price history of the S&P 500 versus long-term US government bonds for the period of 2003 through February 2018. The large bubble which had been in place prior to the election of Donald Trump as U.S. President has expanded significantly.
I have been monitoring this bubble since 2016. It was originally discovered from my crash research that I have been conducting since the Bank of Japan (BOJ) instituted a Negative Interest Rate Policy (NIRP) in February 2016. My research enabled me to find the bubble and other historical anomalies or distortions in the capital markets that have been present for the last several years. Watch the video below to view the charts and graphs for the anomalies and distortions which have put the markets on the precipice of a crash.
I am recommending the deployment of a 90/10 Crash Protection Strategy. For information on the strategy which is the only fail-safe strategy that one can utilize to protect their liquid assets from crashes, recessions and depressions view vide Save & Exit o below entitled “Crash! & 90/10 Crash Protection Strategy”.
My crash research that I began to conduct in 2016, resulted in my developing an algorithm that I utilized to issue market crash warnings during 2016 when negative interest rates posed great risks to the global economy. See equities.com article “NIRP Crash Indicator Signals Very Reliable for 2016”. Due to the ebbing of negative rates in 2017, after Mr. Trump’s election as President and the unprecedented low stock market and especially currency volatility, the NIRP Crash Indicator was disengaged in March of 2017. See equities.com article “No Longer a Need for NIRP Crash Indicator Signals”. Upon currencies volatility picking up the NIRP Crash Indicator will be re-engaged.Its warnings will be available to Trophy Investing’s members.
Disclaimer.Mr. Markowski’s predictions are frequently ahead of the curve. The September 2007 predictionsthat appeared in his EquitiesMagazine.com column stated that share-price collapses of the five major brokers, including Lehman and Bear Stearns, were imminent. While accurate, they proved to be premature. For this reason he had to advise readers to get out a second time in his January 2008 column entitled “Brokerages and the Sub-Prime Crash”.His third and final warning to get out, and stay out, occurred in October of 2008 after Lehman had filed for bankruptcy. In that article “The Carnage for Financials Isn’t Over”he reiterated that share prices for Goldman and Morgan Stanley were too high. By the end of November 2008, the share prices of both had fallen by an additional 60% and 70%, respectively — new all-time lows.