Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Trading Action Repeating Itself—What
the Stock Market’s Setting Itself up for

Friday, July 29th, 2011
By for Profit Confidential

Trading action seems to be repeating itself. What is the stock market setting itself up for?While the price of gold and price of silver continue to be very strong, a lot of gold stocks and silver stocks have been pulling back in price. It’s a reflection of the current state of things, with investor sentiment seemingly stuck in a rut. We’re in a market with so much uncertainty that any call is valid and all outcomes are plausible. The stock market could completely fall apart, stay the same, or advance. A market malaise has set in and it’s almost entirely due to the sovereign debt situation.

Just last week, stocks were looking set for a decent run, as corporate earnings mostly impressed the Street. That rally fizzled pretty quickly and now the S&P 500 Index is back down at the 1,300 level, which I view as problematic in terms of the market’s overall health. What’s happening is that investors are beginning to ignore good news and event-driven trades don’t seem to have any legs. It’s a strong signal that the market is tired and very unsure of itself.

With this backdrop, there certainly is no rush to take action on the long side. Even if the sovereign debt issue were to be settled right now and the market were to make a big advance, there’s just as much probability that it would pull back a month from now on lackluster economic news. The equity market sure isn’t making it easy for traders.

The S&P 500 Index has basically been trading range-bound since the beginning of the year with declining volume. Oddly, it’s following a very similar trading pattern to the beginning of last year where stocks advanced and then didn’t do anything for about 10 months before breaking out. We could be in for a similar scenario this year where stocks might not experience any material rally until sometime in the fourth quarter. That is my current figuring.

While corporate earnings are strong, economic data are not. Last year—and so far this year—the stock market was held together by good corporate earnings, as investors were willing to wait for the economy to recover. The pace of that recovery is most certainly unclear and the marketplace is growing impatient. Couple this with all the problems associated with country debt and deficits, and you could easily make the case for an S&P below 1,300.

I think we’re going to get continued range-bound trading for the next several months with the potential for an end-of-year rally based on the expectation for good fourth-quarter numbers. Corporations are doing their part; now it’s time for the economy and policymakers to do theirs.

  • 100% Profit in Your Pocket Every 14 Days or Less with This Never-Ending Winning Streak

    Any stocks in your portfolio make you 100% or more this year? Let me tell you about 25 of them! In 2013, 25 of our positions reached gains in excess of 100% each. Average profit per pick at their high was 215.6%!

    Our 100% Letter could make you more money in 2014 than ever before! Learn about it here.

VN:F [1.9.22_1171]
Rating: 0.0/10 (0 votes cast)
VN:F [1.9.22_1171]
Rating: 0 (from 0 votes)

This is an entirely free service. No credit card required.

We hate spam as much as you do.
Check out our privacy policy.

Mitchell Clark - Equity Markets Specialist, Financial AdvisorMitchell Clark, B. Comm. is a Senior Editor at Lombardi Financial specializing in large- and micro-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Income for Life and Micro-Cap Reporter. Mitchell, who has been with Lombardi Financial for 17 years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. Add Mitchell Clark to your Google+ circles

The Great Crash of 2014

A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

In fact, we are predicting this crash will be even more devastating than the 1929 crash…

…the ramifications of which will hit the economy and Americans deeper than anything we’ve ever seen.

Our 27-year-old research firm feels so strongly about this, we’ve just produced a video to warn investors called, “The Great Crash of 2014.”

In case you are not familiar with our research work on the stock market:

In late 2001, in the aftermath of 9/11, we told our clients to buy small-cap stocks. They rose about 100% after we made that call.

We were one of the first major advisors to turn bullish on gold.

Throughout 2002, we urged our readers to buy gold stocks; many of which doubled and even tripled in price.

In November of 2007, we started begging our customers to get out of the stock market. Shortly afterwards, it was widely recognized that October 2007 was the top for stocks.

We correctly predicted the crash in the stock market of 2008 and early 2009.

And in March of 2009, we started telling our readers to jump into small caps. The Russell 2000 gained about 175% from when we made that call in 2009 to today.

Many investors will find our next prediction hard to believe until they see all the proof we have to back it up.

Even if you don’t own stocks, what’s about to happen will affect you!

I urge you to be among the first to get our next major prediction.
See it here now in this just-released alarming video.