Before answering the above question,let us go through the data available to us.I went through the internet myself and googled ‘stock market crash’.And many of sites popped up.Many were very interesting.
On one of the articles having the title’Something just happened in the stock market that was a precursor to the 1987 crash‘ ,I read that the ‘The Dow Jones Industrial Average has declined in eight of the past nine days, including the past seven days straight‘.This article was from yahoo finance and appeared on 4th of August,2016.In the article, it stated that the given pattern of the loosing streak is not good historically.On several of the occasions in which it appeared, the stock market has crashed or went for a correction.The worst when it last appeared on 1919, there was a drop of approximately 31.06%.I am sharing the link to the given article for your reference LINK
In another article from Forbes, I read that Prem Watsa who is also regarded as the Canadian Warren Buffet is adding shorts in his portfolio to hedge against his common stock holdings.He has increased his equity hedge ratio to the levels of 115% as of June 30 against 88% on December 30.He stated that they are maintaining their defensive equity hedges and deflation protection as they remain concerned about the financial markets and the economic outlook in this global deflationary environment.I am mentioning the LINK.
You will find many articles on the internet as you will google about a stock market crash.The concern of the impeding stock market crash is rising higher because of the valuations.They are very high now.
There are concerns with Donald Trump becoming the American President as he is not that liked by the Stock Market.If he becomes the American President, then we will definitely get a phenomenal reaction in the market.
From an Indian market perspective, the market seems to discount every bad information very quickly, which is not a good sign.Firstly Rajan will be leaving as the RBI Governor and then the Brexit. Nothing seems to bother.The market is definitely in a euphoria.
Last day I was talking to one of my friend Rajeev Datta Chowdhury who is a professional trader and does his analysis himself.I said him to go for 7000 put of December expiry which I found being recommended in a blog.He asked is it a genuine blog or not. I said that it is a total gamble.Then he analyzed the nifty charts and said me the following things:
Then he showed that this year’s RSI is already 70.41.In these charts, he showed that there is a negative divergence in of Stochastic Oscillator Crossing over.
He said if we get any bad news now like Lehman Brothers of 2008, we might see a sudden fall in the markets from these levels.
Is the stock market going to crash?
The answer is yes, that there are high chances that we might see a huge market crash if anything goes wrong at these levels.Definitely, we are going to get a market correction.And something goes wrong like the Lehman Brothers or any big institution fail, then there could be a phenomenal crash.