Building Financial Danger – March 5, 2012 Update

On October 17, 2011 I wrote a post titled “Danger Signs In The Stock Market, Financial System And Economy.”  This post is a brief seventh update to that post.

The current forecasting consensus among economists and investment professionals is one of slow (U.S.) economic growth, steady if not rising financial markets, and low probabilities (in two recent surveys 9.5% to 16% chance over the next four quarters) of the economy entering a recession.

While I understand how those forecasters have come to their conclusions, my overall analysis continues to indicate a distinctly different situation, one of a continuing elevated and growing level of danger – which contains  many worldwide and U.S.-specific “stresses” of a very  complex nature.  Many of these “stresses” lack recognition, some completely so.

My views of this danger, and its implications regarding the financial markets and economy as a whole, were last discussed in the post of February 21, 2012, titled “Building Financial Danger – February 21, 2012 Update.”

In that post, I reiterated a point I first made on January 11 :

…my analyses indicate that the danger inherent in the financial system has reached a level at which a stock market crash – that would also involve (as seen in 2008) various other markets as well – has reached a level at which a near-term crash is (at least) a significant concern.

(note: the “next crash” has outsized significance and implications, as discussed in the post of January 6, “The Next Crash And Its Significance“)

Since that February 21 post, there have been additional causes for concern, seen in many fundamental economic, financial-market, and proprietary measures.  Many of these measures have been discussed in this blog.

As reference, below is a 14-month daily chart of the S&P500, indicating both the 50dma and 200dma and price labels.  The current price is 1366.22:

(click on chart to enlarge image)(chart courtesy of; chart creation and annotation by the author)


The Special Note summarizes my overall thoughts about our economic situation

SPX at 1366.22 as this post is written