Could wealth held in stocks be in for a shocker?
"Despite the parade of new highs, the stock market is now extremely overbought.
I've mentioned this recently, but we're now moving into what could be a doubly-dangerous period. I say this knowing that my PTI is at historic highs, and that Lowry's Buying Power and Selling Pressure statistics remain long-term bullish. At any rate, the negative seasonal period for the market has tended to be the six months of May to October. If we go back over history, we see that those six months have contained most of the "bad times" for the market.
Then there are the years ending in 7. There has never been a period with years ending in 6 or 7 when the market has been able to escape a meaningful decline. If the year ends without an important decline, it will be the first time since the mid-1800's that this has occurred.
Actually, the three mildest declines of the years ending in 6 or 7 were 1996-97 with the market down 13.3%, 1926-27 when the market was down 16.7% and 1886-87 when the market was down 17.8%.
The three worst instances were 1936-37 when the market was down 49.1%, 1906-07 when the market was down 48.5% and 1856-57 when the market was down 47.4%."