Friday, August 14, 2009

Analyst: Markets Will 'Abruptly' Drop 25-50%

Markets will drop 25 to 50 percent and it will happen abruptly, Dan Deighan, founder of Deighan Financial Advisors told CNBC viewers.

Deighan does not base his forecast on business cycle theory, but just the overall sentiment in America. He says, “There’s no basic foundation for the run-up we’ve had, been far too rapid. It continues to run up on what’s normally considered bad news.

Deighan said in the past, Wall Street “shoved things down Main Street’s throat.” And now, he believes, "Washington" is trying to do the same. Main Street is slowly finding out "what’s going on with the banks, health care and the Federal Reserve’s moves" and they are “absolutely angry.”

“None of this stuff is positive, and Americans are very angry in addition to being scared—a very dangerous combination,” he said.

Normally, this type of sentiment wouldn't be enough to kill the market, but when you are coming into Financial Hurricane Season and Bernanke isn't printing any money, the negative sentiment isn't going to help.

Further, reading into what Deighan is saying, I think Deighan is looking at a lot more than sentiment. You don't talk about an abrupt drop unless you see very weak technical support for the current uptick in the market.

In a few weeks Deighan is going to look like a genius. Here's the CNBC clip:

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