Next stock market crash: A ‘perfect storm’ of bearishness is brewing

Reuters / Cheryl
Ravelo-Gagalac

• As stocks continue to make record highs, the narrow
  leadership in major indexes is masking weakness lurking under
  the surface.
• Vincent Deluard, a macro strategist at INTL FCStone,
  says a correction could rock the vulnerable stock market within
  the next few weeks due to a “perfect storm” of bearish
  factors.

At this point it’s common knowledge that the stock market is being driven higher
by an elite cabal of high-flying companies.

That equity Illuminati includes such companies as Apple, Amazon, Microsoft, Google, Visa, and Mastercard, which have accounted for
42% of the S&P 500‘s gains since the stock
market’s correction in early February, according to data compiled
by INTL FCStone.

This disproportionate contribution to index gains has been
frequently cited as a bearish signal — one that highlights a
troubling lack of
breadth in the market. Because when a select handful of
companies are doing the heavy lifting in the market, it can often
mask underlying weakness.

Vincent Deluard, a macro
strategist at INTL FCStone, notes that record highs
for stocks during periods of low breadth have historically
occurred near the end of bull markets. He cites the market
collapses in 2000 and 2007 as the most contemporary examples. …

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