Marc Faber: Sharp correction coming this month

From Newsmax:

Contrarian investor Marc Faber says stocks will fall sharply in May, turning the recent breakout in stocks into a trap for the bulls.

The markets are due for a correction, and the technicals point to a weak market, Faber tells Wall Street Pit. In particular, he points to the decline in new 52-week highs as evidence of an unhealthy internal market.

Right now, Faber advises investors determined to buy stocks to stay away from cyclicals, tech stocks, and banks... sticking with...

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More from Marc Faber:

Marc Faber: This is the "end game"

Marc Faber: Sell stocks now... buy this instead

"Dr. Doom" Marc Faber shocks CNBC anchor with rant on poor people

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This proprietary risk indicator has turned bearish on stocks

From Pragmatic Capitalism:
Our proprietary risk metric is beginning to throw off a warning signal which comes just as the markets are about to enter their seasonally weakest six months of the year.

The risk ratio indicator is a weighted average of bullish to bearish sentiment, the volatility index, the rate of change for the S&P 500, and the new high/new low ratio of the NYSE. This weighted average is then smoothed with an eight week rolling average to eliminate a lot of the noise.

... While a lot of people look at these indicators individually, we combine weight and smooth them to provide a more global look at market psychology and sentiment. Currently, that outlook is very bullish... As a contrarian investment manager, I think this is a time to begin raising cash and hedging risk in portfolios.

The indicator is best used when...

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Six big signs the market could plunge soon

From Gold Scents:
Warning signs are starting to build. To start we have a Dow Theory non-confirmation. Usually this is a sign of distribution.

Breadth is diverging. This often happens at intermediate tops.

Emerging markets have failed to make new highs.

China, the driver of global growth appears to be in a bear market.
 
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More on stocks:
This rare divergence could mean big trouble for stocks
Why this is a great time to buy "insurance" on your stocks
Top market-timer DeMark: A BIG stock market decline is about to begin
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Three big signs of an imminent correction are in place

From Gold Scents:
There are three things I watch for as a sign that a correction is imminent. They are in order of importance: cycles, sentiment, and money flows.
The current cycle is already stretched to 45 days. Usually this cycle bottoms between 35 and 40 days so you can see we are now overdue for a top. That covers the cycles part of the equation.
Sentiment has now reached bullish levels (contrary sign) that should be enough to force at least...
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More on stocks:
Two more signs that a correction is coming
The huge investment trend you cannot afford to ignore
Top Goldman trader: The market is unbelievably overbought
View the original article here