Glenn Beck on the radio this morning was talking about the Hindenburg Omen and maybe even specifically quoting parts of that article that referred to percentage chances we get a crash. I briefly turned on CNBC a few times in recent days as well and the crash and depression talk is pretty thick.
It is a concern that mainstream media is talking so bearish and they may help to identify the bottom of this drop, but for now I am shrugging it off. To a certain degree we have a bull market in reverse that makes picking up on sentiment hints from the major media a bit more difficult.
We have been in a long term bear market since 2007 and now appear to be entering the next phase of this long term bear. The news from major media has been quite persistently negative or bearish about the economy for a long time now. It seems to be getting worse now. This is consistent with the idea that sentiment would get more extreme negative at the most bearish phase of a bear market. During a very long bull market sentiment reaches many levels of bullishness and the market continues to trade higher even during persistent bullish sentiment. So we may be in that situation now where persistent negative coverage of the market by mainstream media just leads to lower prices.
If this was a ‘shot gun’ type bear market where bearish price trends only last for short periods of time then I think the recent bearish talk would be much more concerning.
I suppose this bear market has become so popular at this point that a lot of people have a vested interest in seeing the market collapse so that they can add a notch on their belt to say they ‘predicted the crash’. It has me thinking that the market will not get a 1 day 10 or 20% drop to prove them right. The market can still drop 10 to 20% from here but make it seem like it is an orderly correction down and then get another big 3 to 4 month rally from the lows. That would still keep people hoping that the bottom is in.
It will be interesting to see if the market gives the mainstream what they want this time . . .