A second leg down for the bear market in stocks would expose 3 'naked swimmers.' That won't be pretty.

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One strategist is warning of a potentially rough September/October period ahead, with chances that a second leg of a bear market could develop, exposing “naked swimmers.”

Following a hat trick for all three major indexes last week, both optimism and trepidation are in the air as a new trading stretch begins.

Echoing that sentiment is Miller Tabak + Co.’s chief market strategist Matt Maley who sees a “huge bounce in economic growth” needed for stocks to significantly rally from current levels, let alone hit a new all-time high. As for those “swimmers,” Maley thinks investors need to be wary of the cryptocurrency market, following recent news that bitcoin mining-pooling service Poolin had suspended withdrawals. The strategist recalls the summer rout for cryptos that coincided with a withdrawal halt by crypto lender Celsius, eventually forced to declare bankruptcy.

The Fed’s monthly quantitative tightening program is due to double this month, meaning the central bank will not be scooping up Treasurys, which may drive down prices. And as corporate debt is priced off Treasury debt, the yields of both could keep rising, and a potential blow-up in credit markets could be out there, said Maley.Finally, he says they’ve been worried by some press reports saying European energy markets could halt, unless governments extend liquidity to cover some $1.

The markets Stock futures ES00, +0.47% YM00, +0.24% NQ00, +0.41% are pointing to a fourth day of gains on Wall Street, with oil prices CL.1, +1.64% BRN00, +1.74% up, the dollar DXY, -0.79% falling and gold GC00, +0.72% is higher. Bitcoin BTCUSD, +3.05% is holding at just over $22,000.

 

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These three potential 'naked swimmers' threaten stocks and financial marketsMiller Tabak + Co.'s chief market strategist Matt Maley has his eye on three troubled areas of financial markets right now. He thinks investors need to be... Marketwatch’s website is just terrible.
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