Saturday, August 10, 2013

Market Will Crash 20% ~ 1987-Style




 "In 1987, we had a very powerful rally, but also earnings were no longer rising substantially, and the market became very overbought," Faber said on Thursday's "Futures Now." "The final rally into Aug. 25 occurred with a diminishing number of stocks hitting 52-week highs. In other words, the new-high list was contracting, and we have several breaks in different stocks."

Faber says that's exactly where we find ourselves this August.

"If you look at the last two days," Faber said, referring to Tuesday and Wednesday, "it's remarkable. We are close to the all-time high, at 1,709 on the S&P, and yet yesterday and the day before, there were 170 new 52-week lows. That's a very high figure."

That means that the market has become very reliant on a very small number of companies.

"The only way this market can go up is if the 10 or 50 stocks that are very strong continue to drive the market higher, with the majority of stocks having actually peaked out," Faber said.
http://www.cnbc.com/id/100950234




Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

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