Dow Unsettled, Warnings Of Instability

Last week, the Dow dropped from around 11,000 to just over 10,000, and that in spite of a late-Friday rally that closed up for the first time last week. Monday, the slide continued, and yesterday the Dow dropped 300 points before closing down 22 points.

I want to make this clear. Experts are saying that if the market goes below 10,000, it's a strong signal that we're in corrections territory and may be seeing a switch from a bull to a bear market. Yesterday, the Dow dropped below 9,800 before rallying and closing just barely above 10,000.

And some experts are warning the market is about to fall hard.
http://www.marketwatch.com/story/crash-is-dead-ahead-sell-get-liquid-now-2010-05-25

Earlier economist Gary Shilling said price-to-earnings ratios are at a "nosebleed 22.5 level." The Dow was around 11,000. Money manager Jeremy Grantham recently said the market's overvalued 40%. That could mean a collapse to 6,600. Last week in Reuters' "Markets Could Be Derailed Again," George Soros echoed a "game over" warning with a "stark warning ... that the financial world is on the wrong track and that we may be hurtling towards an even bigger boom and bust than in the credit crisis."

Now Dow Theory's Richard Russell is warning the public of an imminent crash: "Sell ... get liquid ... by the end of this year they won't recognize the country."

Forecasting the performance of the stock market is usually less of a science and more closely related to locating water with a divining rod. A lot of art, wishful thinking, and guessing goes into it. Remember that when reading ANY such predictions.

But we're hearing more and more people warning of an impending crash. The market itself is displaying signs of volatility as it slowly but surely declines in value.

It may be time to shuffle your investments to protect against what may well be coming.