A Bearish Crystal Ball:
The Index That Predicted the Bear Market Has Not Peaked Yet

 Index measures buying and selling volume trends. And so far, this index has not peaked. This index was correct in identifying weak buy-side volume as early as last August and warned a bear market was in the cards.

On days the stock market posts a big advance, like yesterday, investors are not aggressively accumulating equities. In fact, they are still selling. Lowry’s tells me that the point of maximum selling has not arrived.

Finally, and most importantly, the state of the credit markets is not improving.

Some segments are rallying, including the LBO market or leveraged loans. But most deals are not clearing and banks still have a massive back-log of paper they can’t sell.

Furthermore, banks are reluctant to lend. Their battle-scarred balance-sheets are committed to rebuilding equity. Banks are struggling. Capital is scarce. Lending volume has fallen off a cliff since last fall and it’s not improving. LIBOR rates remain elevated, junk bonds are still declining in value as default rates rise and most credit indexes are at all-time lows, meaning stress is at extreme levels.