Posts Tagged ‘Stock Market Condition’
The climate for the stock market is dangerous at this juncture, with all signs pointing to additional downside moves on the charts. Technology and small-caps are especially weak. The third quarter turned out to be the worst since the financial crisis began in 2008. The key stock indices, including the DOW, S&P 500, and NASDAQ, lost over 10% in the quarter.
You might not know it, but there is real strength in this market from a number of well-managed, dividend-paying stocks. When the broader market is gyrating and investor sentiment is weak, outperformance comes in the form of stability. Plenty of stocks in this market are outperforming the broader stock market and, in spite of all the worries about the sovereign debt crisis and the outlook for economic growth, the earnings picture continues to look good.
The bond market dwarfs the size of the stock market. I know what some of my readers are thinking right now, “If I don’t invest in U.S. Treasuries, it doesn’t matter to me if they go up or down.” This is wrong. The price direction of U.S. Treasuries is based on interest rate expectations. If bonds are rising or decreasing in price, it means that future interest rates will either rise or fall. The entire economy is based on interest rates. Higher interest rates would be catastrophic for the stock market, real estate market, consumers, and businesses.
What a day for the market yesterday. Wherever we looked, we saw a sea of deep red. Stocks got chopped. Gold was down. Bonds were down. My dear reader, you’ll read opinions here in PROFIT CONFIDENTIAL that you will not read elsewhere. (Maybe that’s why 30,000 people a month are flocking to us!). Here’s the bottom line as I see it…
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