David Fuller's view

Here is the important graphic.

This is one of the most bearish indicators that I have seen and no subscriber should ignore this evidence.  Perhaps it is not surprising after a 5-year bull market but the warning is clear: there is much too much leverage in the US stock market right now.  We have yet to see a downward dynamic but it could occur very quickly now that the Nasdaq has lost consistency and is underperforming. 

The next 10% plus correction is overdue and it could easily be 20%.  That would be classified by many as statistical evidence of a bear market although not by my definition.  We saw a decline in the S&P 500 Index of just over 20% in 2011 but it was just a big cyclical correction of medium-term duration.  The main reason it was not worse is that Ben Bernanke stopped talking about QE tapering, which would have been premature at that time.  My guess is that Janet Yellen would intervene to halt a correction of that magnitude if it occurs within the next six months.