Has The Stock Market Crash Begun? Dow Off Big As Headwinds Mount

1929 vs 2014

The January Effect supposes that investors will find post-holiday cheer in the first month of the trading year, yet 2014 has brought nothing but frozen misery, as the Dow dropped nearly 2% in its worst trading day in the past several months on Monday. And that may have just been the first shoe to drop.

Poor news out of the retail sector (including but not limited to the cyberhack of Target et al) along with profit-taking does not bode well for a stretched market, and many believe that US markets – which are up more than 200% since the lows of 2009 – are due for a healthy 10-20% correction.

But might today’s price action portend a deeper crisis?

It’s no secret that the trillions of dollars in bailouts, economic stimulus, and quantitative easing kept the economy from imploding, but with job numbers falling apart and the Federal Reserve’s QE winding down, one could argue there’s nowhere to go but down from here.

Given the fact that leverage throughout the global economy is at all-time record levels, and many MegaBanks are insolvent without govenrment assistance, it’s frightening to think what would happen if the Domino Effect replaces the January Effect in 2014. Smellin Yellen may just have to break out her printing press earlier than expected —

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