Reasons for Pessimism

As I’ve written, my view for the Market remains bearish.  There are several fundamental and technical reasons, among them:

1.    First and foremost - the international debt levels and its carry over into European banks and into the international financial system.  Nothing has been done to adequately address this issue.  Sure, there has been a lot of talks and summits, but the size of the problem is enormous.
2.    The economic slowdowns in Europe, Japan and China – and the U.S. for that matter.
3.    The TED spread (a measure of credit risk for inter-bank lending - the difference between the three-month U.S. treasury bill rate and the three-month London Interbank Offered Rate (LIBOR), which represents the rate at which banks typically lend to each other. A higher spread indicates banks perceive each other as riskier counterparties) has been at "financial crisis" levels for over a month. 
4.    The ISEE put/call ratio is a sentiment ratio and is at a level which, the last three times it was at a corresponding level, in two of the cases, was right before the mini-crash in July and the third case was in September, when the market bounced and then made a new low.
5.    AAII sentiment numbers were also released last week, and bullish investors came in slightly above the long-term average (40+%).   This is also consistent with bear market tops.
6.    The Shanghai Index is looking terrible. 
7.    The U.S. Banking Index is looking terrible.
8.    North Korea and Iran remain huge wildcards.

Can events happen which change my opinion?  Certainly!  However, I will fall back on two things that I have harped on continuously over the last few years:

• The Market’s potential reward at this point is not sufficient for the risk right now;
•  There will always be opportunities in the stock markets, provided one has the capital to take advantage of those opportunities when they present themselves.