Three stock market crash indicators are suggesting that the current bull market may be running out of steam and is susceptible to a significant correction.
Two of the stock market crash indicators are weakness in key sectors, and the other is a technical development on the Standard & Poor’s 500 index chart.
Let’s start with the chart.
The S&P 500 is bobbing in the 1,880, range which is not far below the all-time high of 1,890.9 reached on April 2.
Its steady climb over the past couple of years has put the index more than 20% above its 150-day moving average.
The last time the S&P 500 got that far above the 150-day moving average was in 2011, when it got slammed with a 21.58% correction.
Richard Ross, global technical strategist at Auerbach Grayson, told CNBC that investors should take the parallel seriously.
Noting that a similar decline now would shave about 20% off the S&P 500, thus taking it down to the 1,500 level, he said –
“I think that we’re in exactly the same scenario. I think that’s what we’re staring at right here.”
Ross also pointed out that the S&P 500 has sputtered for most of 2014. Ross said,
“We’ve stalled out at the high end of the trading range. It’s really been a holding pattern for the last two months. Now look, when a market stalls and moves sideways, that’s not necessarily a bad thing. But when that occurs at the tail end of a five-year bull run, with the market up almost 300% over that time… that’s a problem.“
Meanwhile, Gina Sanchez, founder of Chantico Global, said she sees weakness in the housing sector as a stock market crash indicator.
Pending home sales are down 7.4% on the year, and the National Association of Realtors is projecting sales of existing homes to fall nearly 4%. And new home sales for March plunged 13.4% from the same period a year ago and 14.5% from the previous month. Sanchez told CNBC –
