A Big, Fat Stock Market Selloff

Stocks prices are very, very high… Our contrarian colleagues over at The 5-Minute Forecast continuously lament…which means that the collective anxiety of investors is very, very low. Our colleagues don’t mind that a rising stock market is adding trillions of dollars to the asset side of household balance sheets. That’s good news. But the worrisome part is that a falling stock market could erase those trillions from the ledger just as quickly as they first appeared. And as our colleagues correctly point out, rising share prices, coincident with falling investor anxiety, usually adds up to a big, fat stock market selloff…

Stock Market Indices

“In fact,” The 5-Minute Forecast reports, “market volatility is at a 13-month low. The VIX – a gauge of trader uncertainty – is down to 21, the lowest level since pre-Lehman crisis. It’s actually fallen 11 days in a row, the longest losing streak since 2005. (Contrarian alert!)”

The Daily Reckoning