According to Stockman, by not raising rates thus far, the U.S. central bank is only proving that it is "playing by the seat of their pants." And it's only a matter of time before its "gibberish and incoherent" language weighs on the market and brings about the next correction, he said.
"The market has been cycling back and forth and people are beginning to realize the whole thing is a farce," he said. The S&P 500 has seen red for much of the past two weeks, having rallied in only four sessions since the start of November and now tracking for its third down month in the last four.
"The central banks have lost control and you have a few daredevils left who are trying to bid it up," he said. "One of these times we are going to plunge and there won't be any bid when we go down."
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Stockman used the economic slowdown in China, hardships in Japan as well as the crash in commodities and a decelerating U.S. earnings picture as examples of some of the indicators pointing to the undercurrents of a weak U.S. economy and stock market.
Despite his conviction, he did admit it's difficult to tell when the next shoe will drop, as he has been calling for a "major market meltdown" for quite some time. Still, he believes the market is in "utterly uncharted waters" and as fewer stocks are making new highs, the market is "vulnerable to an unexpected and huge plunge." Nearly 70 percent of stocks in the S&P 500 are trading 10 percent or more from their respective 52-week highs, according to FactSet.
"This is really the final spasm of the bull. When this one is over I think we are going down for the count," Stockman added. "That will happen I think sometime between now and the next election."