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MarketWatch's Farrell: The Sky Is Falling

By    |   Thursday, 06 June 2013 08:19 AM

The odds are nearly overwhelming for a stock market crash by year-end, according to MarketWatch's bearish columnist Paul Farrell, who assigns an 87 percent chance to such a devastating free-fall.

Farrell's informal "doomsday poll" takes into account prognostications from some venerable sources, such as Pimco boss Bill Gross and economist Nouriel Roubini.

The last time he forecast a meltdown after assembling the views of various experts, in mid-2008, stocks plummeted two months later, Farrell noted.

Editor's Note:
Billionaires Dump Stocks. Prepare for the Unthinkable.

"The warnings are again accelerating," he wrote in an article for MarketWatch. "And so is the happy talk from Wall Street casino insiders, about rallies, housing recoveries, perpetual cheap money. Don't listen. The next crash will happen by year-end."

Farrell's bearish prognosticators this time around also include Euro Pacific Capital CEO Peter Schiff, economist Gary Shilling, Doubleline Capital CEO Jeffrey Gundlach, Reagan budget director David Stockman and even the Federal Reserve Board Advisory Council.

What about the remaining slim chance the market will not crash in 2013? Farrell lays it at the feet of the Federal Reserve to keep the air in the market's tires for now, and says there's a 13 percent chance the Fed will keep printing "cheap money" into 2014.

"So unless you're shorting, all bets on Wall Street casinos for 2014 are mega-risk, like 2008. Like a Stephen King horror film, you feel it coming. Could happen anytime, even tomorrow..."

However, veteran technical analyst Ralph Acampora of the New York Institute of Finance, who generally has a sunnier disposition among stock pundits, started out bleakly but ended in a more positive view on Twitter on Wednesday.

"Dow Theory: negative divergence — need new closing highs in the DJIA [Dow Jones Industrial Average] and DJTA [Dow Jones Transportation Average] in order to terminate this current secondary correction," Acampora tweeted.

"Two days in a row: failed rallies and negative breadth — the current corrective/volatile period is expected to continue," Acampora wrote. "Part I: traders be nimble because the near-term is expected to be very volatile and provide many quick long and short opportunities."

Acampora finally tweeted a bright stock market view. "Part II: investors be patient, no major tops — thus most declines will be deemed corrections and provide long-term buying opportunities."

In an interview with Yahoo, Paul Hickey, co-founder of Bespoke Investment Group, was also optimistic. Hickey said by his calculations, bears looking for a "June swoon" may be disappointed.

Just because the stock market has rallied for seven straight months does not mean the odds show that the end has to come now, Hickey claimed.

"Look back historically and more often than not the market continues to rally" after a seven-month upward stretch, Hickey said his research showed.

Editor's Note: Billionaires Dump Stocks. Prepare for the Unthinkable.

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The odds are nearly overwhelming for a stock market crash by year-end, according to MarketWatch's bearish columnist Paul Farrell, who assigns an 87 percent chance to such a devastating free-fall.
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2013-19-06
Thursday, 06 June 2013 08:19 AM
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