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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
* Major World Market Indices * Futures Markets * U.S. Sectors and ETFs * Commodities * U.S. Bonds * Forex

N.B.
* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
* My posts are also re-published by several other websites and I have no control as to when their editors do so, or for the accuracy in their editing and reproduction of my content.
* In answer to this often-asked question, please be advised that I do not post articles from other writers on my site.
* From time to time, I will add updated market information and charts to some of my articles, so it's worth checking back here occasionally for the latest analyses.

DISCLAIMER: All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...

Dots

* If the dots don't connect, gather more dots until they do...or, just follow the $$$...

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Monday, May 07, 2012

Consumer Debt Bubble Looming?

Data released on May 7th shows that consumer debt levels rose again and are now at their highest levels since January 2000, as shown on the graph below.

As you can see, the "boom and bust" swings have been steadily widening since that time, which indicates "increasing volatility" in this type of psychological behaviour...some may call it "unstable and unsustainable."


The Monthly chart of the S&P 500 Index below shows a corresponding widening within this same time cycle...however, unlike consumer debt, the value of the SPX has not exceeded the last boom experienced in 2008. Personal debt has actually outpaced the value of the markets (that's the big difference this time) and, in my opinion, it is the next bubble which is about to burst...and I wouldn't be surprised if it's sooner rather than later, particularly since Average Hourly Earnings fell, as reported on May 4th, and they have been in decline since March 2003. This corresponds to the information contained in my post of March 7th.

Add to this, the growing national debt problem, and there is a recipe for disaster waiting to happen (unless the Fed also prints money for each individual who carries debt).