Mark Cook: Stocks Headed for 20 Percent Stumble Within Year

Monday, 04 Aug 2014 06:11 AM

By Dan Weil

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While the S&P 500 index recently enjoyed record highs, the market's strength isn't going to last, says esteemed investor Mark Cook, who was featured in Jack Schwager’s book "Stock Market Wizards."

He uses a proprietary measure called the "Cook Cumulative Tick," (CCT) to predict stock prices, financial author Michael Sincere writes on MarketWatch.

Cook's index combines the NYSE Tick, which represents the number of NYSE stocks ticking upward minus the number ticking downward, with stock prices. The indicator predicted the 1987, 2000, and 2007 crashes and the trough of March 2009, he says.

Editor’s Note: New Warning - Stocks on Verge of Major Collapse

"There have been only two instances when the NYSE Tick and stock prices diverged radically, and that was in the first quarter of 2000 and the third quarter of 2007. The third time was April of 2014," Cook tells Sincere.

That spells trouble, he says, predicting stocks will drop 20 percent or more within 12 months.

"It may take months and months for the correction to develop."

On Friday, the Standard & Poor's 500 index lost 5.52 points, or 0.3 percent, to 1,925.15. The index fell 2.7 percent for the week, its worst weekly performance since June 2012.

Cook's not the only one who thinks the five-year bull market is overdone. Mutual fund manager John Hussman, president of Hussman Investment Trust, sees a major obstacle.

"Make no mistake: this is an equity bubble, and a highly advanced one," he writes in his weekly market commentary. "On the most historically reliable measures, it is easily beyond 1972 and 1987, beyond 1929 and 2007, and is now within about 15 percent of the 2000 extreme."

Editor’s Note: New Warning - Stocks on Verge of Major Collapse

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