Goldman Sachs recently announced that they believe the stock market is poised for at least a short-term sell-off. Bearish calls from major Wall Street firms are rare, so it makes sense to pay attention to this news.
In addition to Goldman's change of heart, I have a few other reasons to be concerned about the short-term. Here are a couple ideas for where to put investment capital while the risks are high.
In March of this year, Goldman Sachs said they believed stocks were undervalued and over the next few years stocks would deliver strong gains. Three months later, strategists at the firm said the S&P 500 could fall towards 1,285 from a recent 1,350. Their bearish call makes sense. Stocks have gone down slightly in the past three months while the economy has shown signs of deterioration. This is a setup for a bear market.
To spot investment opportunities, I like to look at the 26-week Rate of Change ("ROC") indicator. This indicator points to promising stocks and ETFs that have real potential to outperform the market. It also points out the stocks and ETFs that are most likely to underperform. I've found the same general idea can be applied to economic data as well. (more)
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