Emerging Parallels to the Fall of 2007 - Hallmark of a Brand New Crisis

The fall of 2017 is increasingly looking like the fall of 2007 when risky assets topped out:

The Case for a Sell in May and Go Away

Chart of the Day - Investor Credit

The chart of the day is from Advisorperspectives and it shows that Margin debt in investor accounts continues to be at alarming levels and has eclipsed levels seen prior to market melt downs in 2000 and 2008. Is history about to repeat itself again?

Early Signs of a Deflationary Collapse?

Some interesting developments are playing out in long term charts that make me feel comprehensively bearish over the long term:

a) Firstly a massive rising wedge  has formed on the long term S and P 500 chart. This is much bigger than that observed in 2000 or 2008 and has started to break to the downside which could have profound consequences. A major bear market could ensue post the break. Chart courtesy StockTwits.com:

b) Secondly Margin Debt is at record levels and has eclipsed levels seen during the maniacal peaks of 2000 and 2008. Once the above rising wedge breaks you could have a rush for the exit triggered by margin calls. Chart courtesy advisorperspectives.com:

c) Thirdly despite multiple dosages of Quantitative easing (#QE) from global central banks the velocity of money is below the levels observed during the Great Depression. This implies that changes in money supply will have little impact on the economy going forward. Further QE's are likely but won't really stimulate the global economy. Chart source armstrongeconomics.com.

The above developments taken together with ongoing bear markets in several key asset classes  make for a deflationary collapse increasingly likely in the not too distant future.

Why I am Ultra Bearish Long Term from Rajveer Rawlin

Deflationary collapse up coming? http://t.co/wiJoi1PQfi pic.twitter.com/Z7otAmPEF5

— samuelR (@RajveerRawlin) September 7, 2015