Alibaba’s IPO Signal A ‘Crash’ In The Stock Market?

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The following excellent article is taken from Marketwatch. I absolutely agree that we will see market crash but when? If the Cycle does not invert, I believe it could happen in 2016. Here is a small part of it…

HAPEL HILL, N.C. (MarketWatch) — Wouldn’t it be ironic if this great bull market ended last Friday, on the occasion of Alibaba’s record-setting IPO, the largest in history?

More than a few of the investment advisers I monitor are entertaining that possibility, especially in light of Monday’s triple-digit loss in the Dow and the Nasdaq’s decline of more than 1%. Alibaba dropped over 4% on its second day of trading.

Those advisers point out that history’s most significant market tops have often been accompanied by high-profile events that prompt the average investor to overcome any residue of skepticism they may be harboring.

Alibaba’s BABA, +0.81% coming to market was certainly high profile, as its incredibly successful IPO last Friday was page-one news all weekend, featuring pictures of hundreds of cheering Chinese investors who became instant millionaires.

Yet this isn’t the first time that commentators have openly speculated that the bull market had breathed its last, and at least so far they’ve been proven wrong. I remember that some advisers used the occasion of Facebook’s FB, -0.22% May 2012 IPO to say more or less the same thing that they’re now saying on the occasion of Alibaba’s huge IPO.

Nevertheless, there have been a number of disturbing developments in recent months that distinguish today’s market from those that prevailed at other points in this bull market. And, according to at least one market historian, these developments suggest that a market top of no small significance is imminent.

This historian is Hayes Martin, president of Market Extremes, an investment-consulting firm in New York whose research focus is major market turning points. I first heard of Martin’s work from David Aronson, a former finance professor at Baruch College in New York who now runs a website, Trading Systems Synthesis and Boosting, that makes complex statistical tests available to investors.

Aronson said he doesn’t “know anyone who has studied market extremes to the depth that he [Martin] has.”

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