This Number Shows Why a Stock Market Crash Is More Likely Than Ever

Even though stocks just hit record highs on all three major indexes, a new stock market crash warning sign is showing up.

Most investors consider this a sign to run for the hills. But for you, it's a time to take control when most investors are shaking in their boots.

In fact, a market crash might actually be profitable for investors who stay on their toes.

There's plenty of evidence for an oncoming crash. You've probably heard some of these already.

The biggest, broadest piece of evidence is a prolonged bull market. It's been over 10 years, making it the longest in history. And all bull markets come to an end.

Edward Yardeni, president of Yardeni Research, recently told CNBC that stocks reaching all-time highs too quickly may cause a "market melt-up." This refers to unstable, dramatic gains producing like-for-like pullback, introducing a wave of pessimism and eventually a crash. But this is just one of many possible scenarios.

A more specific piece of evidence is the underperformance of major stocks this earnings season. Google parent Alphabet Inc. (NASDAQ: GOOGL) fell 2.2% on Oct. 29 after a big third-quarter miss. The tech sector, in general, has feared a slump as ongoing U.S.-China trade worries threaten their overseas manufacturing.

Even more salient is the inverted yield curve, which has preceded every recession since 1950.

Whether the argument is that the market is cyclical or that the market is reactive, the shared sentiment between analysts is that all bull markets eventually end.

But today's chart shows it's more likely than ever right now. Here's exactly what's happening - and how to prepare.

The Biggest Stock Market Crash Warning Right Now

UBS Group says that earnings expectations are contracting, and that could be a serious sign a market correction - or even a crash - could be on the way.

It said that every bear market of the past 50 years saw an actual decline in S&P 500 forward earnings. It certainly is hard to argue with the logic.

Forward earnings are an estimate of profit for a certain period, at some future date. And as you can see in the chart below, it's not a good sign when they fall.

It's important to note that falling earnings expectations can happen without a bear market following. Just consider the market in 2015-2016. Earnings expectations declined, and the stock market merely dipped into correction territory, which most people define as a decline of 10% or greater, but less than 20%.

Remember, this is only the latest atop a heap of other stock market crash signals. And earnings are ultimately what drive prices.

Still, that doesn't mean we want to be scared out of our portfolios. Now is a good time to assess the market's true health and, if necessary, make adjustments to reduce risk.

It's not a time to panic, it's time to take control, protect your money, and even profit from what comes next...

How to Prepare for the Next Stock Market Crash

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We're not expecting a crash just yet, but the signs are there. Fortunately, you don't have to be blindsided if it does happen.

Instead of waiting to be a victim, you could find safety in the 10-year U.S. Treasury.

This asset is ready to shoot up the moment the market takes its next big fall. And it's simply due to the fact that bond prices rise as yields fall.

You see, the mainstream media wants you to believe that everyone loses when averages are down. But that assumes every investor is the "average investor." In the real world, rules have exceptions.

When stocks are down, there is always a reliable safe haven. It's just a matter of timing it right.

Right now, yields have crossed their 200-day moving average of 3%. That indicates they're searching for a new floor, which could lie beneath the 2.5% level. And that means bonds will rise significantly.

The most accessible, affordable way to invest in the rise of treasury bonds is through the iShares 7-10 year Treasury Bond ETF (NASDAQ: IEF). Shares sell at $102.59, but the stability of this investment, managed by BlackRock Inc. (NYSE: BLK) far outweighs the control you give up investing in bonds directly through a broker.

Be mindful that this is not a buy-and-hold investment. It's a safety net to protect from loss in a weakened market. Grab it when things start to look grim, and sell when the sun starts to show.

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