Market Crash Ahead?

Currently, The Asian, US and elsewhere stock market looks healthy. The problem in the US housing market is "contained" in the subprime sector. Everything seems to be robust...

But what others don't know is that the risk of loss is always at its highest on the precise moment that most people judge it of least concern. Eventually, prices would reach its tipping point... a moment of desperate reality... another market crash. Most likely, there will be no crash tomorrow nor the day after. But there are some things you are better off preparing for, even though they may not happen for a while.

Here are some of the concerns that traders should focus on in the coming days.

1. The Chinese stock market is getting hit hard. Its CSI 300 Index is down 17% in the last three weeks. Brokerage account openings have dropped by two-thirds. Could global hot money... and local cold cash…turn bearish on Chinese shares? Could this trigger a worldwide equity sell-off? Yes it might.

2. The dollar is in trouble. The Friday's NFP released data was in favor for the dollar but it didn't help much. On Wednesday, it hit its lowest level against the pound (GBP) in 26-years. It is now near its lowest level ever against the euro. Trillions worth of dollars now sit in foreign vaults. while reserve managers openly talk of diversifying away from greenbacks. Foreigners don't have to abandon the dollar in masse to knock it down, all they have to do is to let up on their purchases of dollar-denominated assets - such as U.S. Treasuries. Could it happen? Could the shock cause a crash in major financial markets? Why.. yes... it might.

3. All paper currencies are dangerous. The dollar is not the only paper currency in the world whose supply is growing rapidly. Practically every central bank is printing up its own money in vast quantities - trying to keep up with the U.S. brand. This is why the world has so much "liquidity." It's why so many assets are rising in price so steeply. But could investors suddenly become fearful of so much monetary inflation? Could consumer prices shoot up as asset prices already have? Could the world's people want to get rid of their paper currencies in favor of other stores of value - notably gold?

4. A Milan-based bank, Italease, has just seen its derivative portfolio blow up. So has Bear Stearns (BSC). Large lenders are getting skittish of complex debt instruments, just as more deals than ever before come to market. So far this year $1 trillion in deals have been done in the North America - a rate of deal-making nearly 50% higher than the year before. What happens if the wheeler-dealers don't find the credit they're looking for? What would investors think if even one of these mega-deals blew up badly?

5. The Bank of England raised its key interest rate on Thursday by 25 basis points to 5.75 percent, another six-year high. This is the fifth time this year. The ECB's Trichet held steady this month but hints that rates will go up in the future. Elsewhere, banks are likely to hike rates too. And watch out if the Chinese decide to do some serious tightening.

Could there be even bigger blow ups waiting to happen? And could they cause a stampede for the exits? Anthony Bolton, Britain's most successful fund manager, worries about it. So does the Bank of International Settlements. And so do central bankers in Madrid, London and who knows where else. And if the pros stop lending so freely, might not it trigger a credit crunch and a crash?

For the last 2 weeks. The majors just did a range bound. If you look at it in a medium term chart, market is indicision phase. The after effect of this would be a breakout, whether a big reversal or a continues steep down... we don't know yet. But we will keep our eyes open.. and keep our ear on the ground.