It has been an ugly couple of weeks for the stock market and, while the summer months are often difficult, the ballooning number of global hot spots has put even more pressure on stocks. The negative signals from the technical indicators (The “Real Reason” for the Market’s Plunge) are still in force as the major averages reach stronger support.
Then, late last Thursday, the markets had to deal with the news that US forces would again be seeing limited action in Iraq. It is not quite four months since the April lows when many investors feared that the economy and company earnings would not be good enough to support the high stock prices.
Therefore, the sharp market rally that began in mid-May caught most by surprise and the market stayed technically strong until early July. The latest earnings season has beat analysts’ estimates and the recent strong US economic data has supported the contention that the very weak 1st quarter GDP data was an aberration.
The selling was relentless last week, which was what I feared on July 11 when I asked investors if they Should You Reconsider Buying the Dip? At the time, I also noted that uniformly high bullish sentiment was not being supported by the technical readings.
So, has the fear level reached a level that is consistent with a market bottom? Though I rarely read other analysts’ opinions, I did come across a recent post by frequent MoneyShow speaker Nick Vardy.
Source: Markets
