What will the stock market do in 2012?
The turmoil in Europe is due mostly to both social mood and foreign stock markets having plummeted for more than a year and a half, while the larger EU stock markets have levitated. the debt per person in Greece looked eerily similar to the debt per person in highly regarded countries, such as Germany and France -- and even to non-eurozone countries, such as the United Kingdom. A market top, when it happens, does not ring a bell. Crash will come suddenly when least expected. Bullish sentiment was too high. Prices are detached from reality. Almost everyone believed the market would go even higher and they would sell to the greater fool at a higher price. If everyone is in this plan, where is the sucker to buy from them at a higher price??? Everyone is asking "What will the stock market do in 2012?"
The answer lies in technical indicators. Put/Call ratios are a clue that we had a top. Daily accumulation-distribution index shows stocks are under distribution for many weeks now.
A deflationary depression is the direct result of excessive debt. There is no way to avoid it. Here is why in layman terms: When we borrow, we borrow from the future. If we don't pay back, and the future arrives, we find it empty, depleted, consumed. What was borrowed will be paid back. Since we never paid back in the past (and always postponed every recession with more borrowing), we now have to face a deflationary depression.
Why can it not be postponed again? Because when the debt accumulates, there comes a time when interest burden on existing debt becomes unsustainable. It is like a family who borrows a big mortgage. Rates edge up and poof. Foreclosure.
We are still enjoying cheap credit due to Uncle Sam's ability to borrow, but that will come to end too. Prepare for the market crash.
http://www.tradingstocks.net/html/prepare_for_market_crash.html
