Triggers for a 2013 Stock Market Crash
With talk of the Hindenburg Omen, the Fed ending QE and government shutdowns, it’s important to prepare for the potential impact of bumps ahead. It’s no wonder why we are hearing more about “2013 Crash Talk” in the stock market and it’s stirring up.
Wall Street’s chart gurus have spotted the ominous “Hindenburg Omen” in the stock market multiple times since August 2013. It’s extremely rare to see as many Omens occurring together as we’ve seen over the past 50 days. The last time was prior to the bear market in 2007. The time before that was prior to the bear market in 2000.
Two months ago, U.S. Federal Reserve Chairman Ben Bernanke floated a plan to taper the $85 billion monthly bond program that has fueled a surge in the global economy. Now any hints from the Fed that a taper is near sends the market tumbling into triple-digit declines.
As for a stock market crash, the last debt ceiling battle in the summer of 2011 triggered a 15% drop in the S&P 500 from July to September.
Historically, the 60 days of trading after Labor Day weekend haven’t provided the best returns for investors. Average September returns for the S&P 500 from 1929 to 2012 were a 1.1% decline.
Stock market crashes of 1929, 1987, and 2008 all occurred in October, which is coincidental, but another harbinger that lurks on the horizon. Traditionally, investors breathe a little easier when the first of November rolls around, although this coming October could feel a bit longer than usual with a full 23 days of trading, the most possible for the month.