The stock market is set up for panic, and it could spark a steep crash, portfolio manager says

The stock market is showing signs of a potential steep correction, as warned by Michael Gayed. He pointed out three key indicators that are flashing warning signals in the market. “I still think we’re all in a lot of trouble,” Gayed wrote, emphasizing that all bubbles eventually burst.

Gayed, a portfolio manager at Tidal Financial and author of The Lead-Lag Report, highlighted the rising prices of gold, utility stocks, and long-term Treasury bonds as troubling signs. These assets are typically sought after for safety during market downturns, and their synchronized movement could indicate an impending market shift.

Many on Wall Street, including Gayed, have been cautioning about a potential bubble in stocks. The dominance of mega-cap tech companies in the S&P 500 has drawn comparisons to the dot-com and 2008 market crashes.

Gayed advised investors to prepare for a possible stock market crash, although he did not specify a price target for the year. He expressed concerns about the widening wealth gap between tech stocks and other public companies, emphasizing that all bubbles eventually burst.

Despite these warnings, investors remain optimistic about the market, with over 50% feeling bullish on stocks for the next six months. This optimism is reflected in surveys showing high expectations for the Dow to end the year higher, indicating the most positive sentiment since 2007.

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