The Bermuda Triangle is an ever un-solved mystery? But do you know the stock market also gives rise to this triangle when exuberance reaches astronomical level

The Bermuda Triangle Stock Market Indicator gets its name from the fact that it creates the perfect storm for a market meltdown when the 3 components coincide to form a triangle.

Beware ! whenever this imaginary triangle forms in stock market, investors money vanishes just like the area in Bermuda Triangle.

The 1st component is the liquidity available at stock market. Excess liquidity just like now means excessive margin debt which is at $935 billion, this creates the perfect recipe for disaster.

1st component

The 2nd component is the easy money from Fed, which floats to a sector or two where the bubble starts forming and is eventually going to burst.

2nd component

When the Central Bank floods the market with cheap money and liquidity, it’s creates a high risk appetite. Because interest rates have been so low for so long, investors have been paying up for growth and reaching for yield with revenues and valuations becoming a secondary factor. This is the 3rd component.

3rd component

Low interest rates along with record cash reserves have allowed companies to buy back shares to meet EPS estimates even while missing bottom line revenue results. 

Additionally companies have held back on hiring and are running leaner than ever as real employment rates remain extremely high. 

While the Federal Reserve did a great job of propping up a failing economy, they forgot the most basic economic principle, supply doesn’t create new jobs, demand creates new jobs. 

Don't get caught in the next Bermuda Triangle.

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