Glenn Neely, author of The Neely Method, just put out a public announcement that all of his trading indicators are signaling a market crash in the next 1-3 months.
The only other times in the past 35 years that he’s gotten this strong of a crash signal were the high in 1987, the high in 2000 (the internet bubble), the end of the real estate boom in early 2008 and the high made in August 2015. He hasn’t announced a major impending correction since the 2015 meltdown.
He says his crash call is based on current wave structure, U.S. margin debt, insider selling, overbought warnings from his intriguing Moat Index, a rising interest rate environment and the volume of new accounts being opened at brokerage firms in 2017 around the country.
He says the only ingredients missing are volatility and media coverage, and that may mean the market needs to put in a blowoff top in the next month or two. But he also says the market could simply sell off and start a violent decline after a retrace to a lower high.
The kind of crash Neely is looking for would be the largest, fastest decline in 10 years and the start of a 2-4 year bear market that retraces at least 50% of the move out of the 2009 low. He feels rising interest rates might be enough to crash the market on their own, but international tensions or the end of major stock buybacks could also stress the market.
I’ll post charts Thursday showing the most likely scenarios for a crash, or a crash following a blow-off top.
Neely runs a fund that trades his method and offers trading advice at Neowave.com.