By Graham Summers, MBA

The inventory market is primed for an additional main leg down.

Why?

Treasury yields are spiking once more.

The yield on the 2-Yr U.S. Treasury has exploded increased… blasting via its earlier excessive of 4.72%. It’s now closing in on 5%.

Keep in mind, it was simply 1.25% this time final yr.

Why does this matter?

The ENTIRE collapse in shares to date on this bear market has been on account of Treasury yields spiking. Buyers used to gather 0.25% “threat free” from these bonds. They’ll now get nearly 5%.

On account of this, nobody is keen to pay 20-22 instances ahead earnings for progress from shares. As an alternative they’re paying simply 16-18 instances ahead earnings. And by the look of issues it’ll quickly be decrease than that. Treasury yields maintain rising… so shares will maintain falling.

That is the form of atmosphere wherein crashes can occur. The Fed is quickly shedding credibility. And traders have been suckered into believing the “worst” is behind them: they poured $1.5 billion into shares daily in January. And so they did this at a time when my proprietary Crash Set off is now on the primary confirmed “Promote” sign since 2008.

This sign has solely registered THREE instances within the final 25 years: in 2000, 2008 and in the present day.