{"id":38692,"date":"2013-06-01T17:21:45","date_gmt":"2013-06-01T21:21:45","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=38692"},"modified":"2013-06-01T17:21:45","modified_gmt":"2013-06-01T21:21:45","slug":"equity-flux-the-stock-markets-latest-problem","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/06\/01\/equity-flux-the-stock-markets-latest-problem\/","title":{"rendered":"Equity Flux: The Stock Market\u2019s Latest Problem"},"content":{"rendered":"

\"Equity<\/a>Blue chips<\/a> need a big retrenchment.<\/p>\n

I never root for losses, but with equities having gone up so much, a correction would be beneficial from a technical perspective.<\/p>\n

Action in the stock market and blue chips<\/a>, specifically, has been spectacular this year. But it\u2019s time for a break.<\/p>\n

While history proves it\u2019s not wise to fight the Fed or the ticker tape, the stock market is most definitely a leading indicator.<\/p>\n

As a fan of dividend-paying blue chips, utilities and consumer staples are good multiyear investment themes. But being at their cyclical highs, I would not be a buyer right now. These stocks are frothy.<\/p>\n

I think it’s probable this year that the U.S. economy will outperform other developed economies. I also see the formation of an equity universe, in which big investors are still buying blue chips.<\/p>\n

Corporations do have to perform. But with excellent balance sheets among most blue chips, the stock market<\/a> can finish the year higher than its current level (save for a shock).<\/p>\n

The end of quantitative easing is slowly being priced into the stock market. While more news on the subject from the Fed would result in a sell-off, this is not an unexpected reality.<\/p>\n

The one shock that this market is not ready for is a rise in short-term interest rates. This is a possibility, perhaps even by the end of this year, depending on economic news.<\/p>\n

Long-term cycles are in a state of fluctuation. (See \u201cStock Market Fake-Out: Where Is the Retrenchment?<\/a>\u201d)<\/p>\n

I remember Black Monday on October 19, 1987. It was an accident waiting to happen. The stock market crashed, lost a ton of money, then made it back in two years.<\/p>\n

There was another financial crisis and recession. Inflation and higher interest rates were part of that picture. Then things took off\u2014again.<\/p>\n

Still, it is difficult to be bullish considering where the stock market just came from.<\/p>\n

Blue chips are fully priced and the marketplace has placed its bet. Second-quarter earnings season must deliver tangible revenue and earnings growth or investors will bail.<\/p>\n

A diminishment or the end to quantitative easing isn\u2019t much of a worry from my perspective. It\u2019s always best to leave the marketplace alone. But the short-term interest rate debate is going to heat up, especially if economic data pick up in the bottom half of the year.<\/p>\n

So far, the action in blue chips makes sense. If you were going to be a buyer with all this fragility, investors bought the safest names.<\/p>\n

The biggest surprise was that the stock market did not sell off on first-quarter earnings. And the fact that it didn\u2019t increases the likelihood of a major near-term retrenchment.<\/p>\n

Article by profitconfidential.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Blue chips need a big retrenchment. I never root for losses, but with equities having gone up so much, a correction would be beneficial from a technical perspective. Action in the stock market and blue chips, specifically, has been spectacular this year. But it\u2019s time for a break. While history proves it\u2019s not wise to … <\/p>\n

Continue reading “Equity Flux: The Stock Market\u2019s Latest Problem”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-38692","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/38692","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=38692"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/38692\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=38692"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=38692"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=38692"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}