Hope & Optimism in the stock market
However, Be Cautious of Wildcards
Weekly Market Outlook
By Donn Goodman
The investment markets have whimpered into August after a huge record-breaking stock market rally in July, encouraged by declining long-term interest rates.
We’ve heard many explanations, including “digesting the gains” to a “period of consolidation” to “that must have been a bear market rally.
Friends of ours frequently comment that they like the tone and tenor of these Market Outlooks, especially since last fall when we began consistently warning our readers to be careful and evaluate risk more closely.
It started in November with, “Something Stinks.”
Others, however, have commented that “you have a negative bias” or that you should “consider lightening up – things, are not that bad.”
I offer these quotes to sum up our desire to present the truth as we see it, always knowing that you are the final arbiter.
“An investment in knowledge pays the best interest.”
– Benjamin Franklin
“If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.”
– John Bogle
I point out that lately, we have changed our stance to one that is more neutral.
If you have watched Keith’s recent videos and read our Big View bullets, you will notice that many of our technical indicators began to improve in early July.
More importantly, several of our strategies flipped to Risk On, and went back into the market.
We watch other publishing entities, and we’re proud to say that we were early among many market timers. Our indicators have held up well thus far.
Since we began this company in the late 1990’s we have always subscribed to presenting the truth as we see it.
Through our free and premium Big View commentary weekly videos, and members only training sessions, we provide the backup data so you can see how, why, and when we’ve arrived at our base case conclusion(s).
Knowledge is power, and we want to give you the power to execute your investment or trading strategy with good reasoning.
You might also note that last week’s article was about Mixed Signals (click here to see it).
“Mixed” suggested that one could easily interpret a bullish or bearish sentiment from all of the economic indicators, charts, and commentary we presented.
Still, many positives have the shadow of a potential contradiction. We lay out some of these below.
- So far, corporate earnings have exceeded expectations, but here’s why they may falter in the next few quarters and keep a lid on stocks prices.
- Last week’s good employment report may actually be bad for interest rates. The Fed may have to stay more aggressive than recent expectations.
- Inflation may be on the decline, but it could stay elevated far longer than is acceptable by consumers and certainly the Federal Reserve.
- The recent home buying slowdown could be a bad sign for our economy. Discover what higher interest rates are doing to home purchases and homebuilder stocks.
- Consumer sentiment is still very low, but it’s working as a bullish, contrarian indicator. Find out how to evaluate it for movements in the market.
- Could the recent up move in stocks really just be a Bear Market rally?