Fourth Quarter Earnings Prove to Be Catalysts for Stocks

So far, things aren’t looking so good. The stock market is really worried about large-cap technology stocks.

IBM posted solid financial results, and so did Apple. But investors aren’t enthused about the future. A few major disappointments of late have also helped to take the wind out of the market.

One thing’s for certain: It’s going to be a tough first quarter for equities.

Perhaps we can blame the current performance from corporations on the slowing economy. You see, the larger the business, the more likely it is be affected by changes in the general economy.

Let’s also not forget that the main stock market averages did exceedingly well in the second half of last year. The big-name indices all are due for a rest. It’s not surprising to see some wind knocked out of this market. Investors are just a little tired of bidding up stock prices.

If I had some money earmarked for the stock market right now, I’d definitely be sitting on the sidelines. This is particularly the case with large-cap investment opportunities.

In smaller companies, I’m not seeing the same amount of attractive investment opportunities right now as I did in the beginning of 2006. Again, this leads me to be cautious at the present time.

So, all you can do at this time is keep riding your winning positions, cut your losers, and sit tight. I’d put my cash in a money market fund. I’m in no rush to take on new positions, because I think the stock market is going to take a significant breather over the near term. It’s a natural correction after such a strong performance last year.

So far, fourth quarter earnings have provided a new catalyst for stock prices. Unfortunately, the catalyst is for lower stock prices.