One question top of mind of many readers is whether the stock market will crash in 2017, after a gigantic 7 year bull market.
Though the “7 bear bull market” argument is definitely a valid one to take into account, it is not per se a condition. A long bull market can also get longer, and we do not know at this point whether we will see a “mania phase” first.
Another argument was posted on Forbes Will There Be A Financial Crisis in 2017 in which the author argues that there has been a financial crisis in the seventh year in three of the last four decades: 1987, 1997, 2007. There again, we do not consider this a convincing argument.
We remained convinced that a stock market crash in 2017 would have brought warning signs in 2016. We do not see that. Our recommendation is to remain focused on what prices are doing. Price analysis lead us to the following conclusion which we explained in detail in our July analysis S&P 500 Suggests Much Higher Prices Coming In 2016 And 2017:
The fact of the matter is that U.S. stock markets are trending higher, and will trade much higher in 2016 and 2017. We could find this counterintuitive, but that’s not important. It is an opinion which falls in the category “noise”. The charts are fact based, and that is the only thing that matters.
Our chart does not suggest a stock market crash in 2017
We stay focused on ongoing price action in the stock market’s chart. We do NOT see signs of a stock market collapse in 2017. If anything, the retracement in September tested the 2016 breakout level, which we consider an incredibly bullish sign.
In other words, the stock market collapse story could work well as a “story” to sell page views, but it is not a serious thesis when looking at a chart.