The stock market for the past year has been supported by numerous economic and financial tailwinds that have helped propel it to retrace a significant portion of the 2007-2009 decline, roughly a 61.8% Fibonacci retracement for the S&P 500. That said many of the prior tailwinds have become headwinds leading to a deceleration in stock prices. Looking at various indicators suggests that these headwinds are likely to continue through the bulk of 2010 and implies a potential economic growth scare. Moreover, with a slew of potential market wild cards (BP oil spill, Euro debt crisis, China economic deceleration, US state fiscal nightmares) filling the investment landscape it would not take much for a growth scare to turn into a double-dip recession. Clearly the time to be bullish was in 2009, while at the present time capital preservation is likely to be the order of the day. (more)
Friday, June 25, 2010
Headwinds & Market Messages
The stock market for the past year has been supported by numerous economic and financial tailwinds that have helped propel it to retrace a significant portion of the 2007-2009 decline, roughly a 61.8% Fibonacci retracement for the S&P 500. That said many of the prior tailwinds have become headwinds leading to a deceleration in stock prices. Looking at various indicators suggests that these headwinds are likely to continue through the bulk of 2010 and implies a potential economic growth scare. Moreover, with a slew of potential market wild cards (BP oil spill, Euro debt crisis, China economic deceleration, US state fiscal nightmares) filling the investment landscape it would not take much for a growth scare to turn into a double-dip recession. Clearly the time to be bullish was in 2009, while at the present time capital preservation is likely to be the order of the day. (more)
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