Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold & the USDX: Correlations - 2nd Dec 20
How An Ancient Medicine Is Taking On The $16 Trillion Pharmaceutical Industry - 2nd Dec 20
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20
MUST WATCH Before You Waste Money on Buying A New PC Computer System - 27th Nov 20
Gold: Insurance for Prudent Investors, Precious Metals Reduce Risk & Preserve Wealth - 27th Nov 20
How To Spot The End Of An Excess Market Trend Phase - 27th Nov 20
Snow Falling Effect Christmas Lights Outdoor Projector Amazon Review - 27th Nov 20
4 Reasons Why You Shouldn't Put off Your Roof Repairs - 27th Nov 20
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Three Walls of Worry Hitting the Stock Market

Stock-Markets / Stock Markets 2010 Feb 18, 2010 - 12:16 PM GMT

By: Claus_Vogt

Stock-Markets

Best Financial Markets Analysis ArticleStock markets around the world are down about 10 percent since their January highs. Complacency, which was so high only weeks ago, has quickly vanished. Worries, if not outright angst, have returned.

However, if you take a closer look, you can detect interesting differences in the “walls of worry” building up in three major regions of the world. And since it’s often said that stocks climb walls of worry, these could lead to the next leg up for stock prices …


Wall of Worry #1: Europe — Sovereign Debt Crisis

In Europe market participants are worrying about sovereign debt levels. Greece is poised for a funding crisis if left alone — as is Ireland, Portugal, Spain, and Italy.

Take a look at the chart below. You can see how this wall of worry has pushed European indices down to their rising 200-day moving averages and at the upper boundaries of massive support areas.

German DAX Composite

Source: www. decisionpoint.com

Wall of Worry #2: China — Too Much Growth

In China, the world’s third-largest economy, an overheating economy is the main source of the current worries. And it’s igniting inflation and asset bubble fears.

In an attempt to slow things down, last Thursday the Chinese central bank tightened its reserve requirements for lenders. However, some experts feel that the government’s efforts might not accomplish much …

According to Bloomberg three firms have not revised their growth outlook for China since the change in the reserve-ratio announcement: Goldman Sachs still predicts 11.4 percent, Bank of America-Merrill Lynch 10.1 percent, and Capital Economics 10 percent. All represent sharp increases from 2009 when the Chinese economy expanded 8.7 percent.

The chart below reflects this outlook: A rising 200-day moving average and a deeply oversold market that are typical for a market ready to rally.

Shanghai Stock Exchange Composite Index

Source: www. decisionpoint.com

Wall of Worry #3: The U.S. — Too Little Growth

In the U.S., pundits are worried about high unemployment, which the White House says is expected to average 10 percent through 2010. Concerns about a slow and bumpy recovery, or even a double-dip recession, are adding to a relatively dire picture.

Last year’s fourth-quarter GDP growth of 5.7 percent is treated as ancient history. And President Obama’s enthusiastically-greeted presidency is showing severe erosion.

However …

The U.S. Still Leads the World’s Financial Markets And Shows No Deterioration!

I’m a European living in Germany. Yet my main analytical attention has always been directed towards the U.S. financial markets, because that’s where the major trends are born. The 2007-2009 crisis showed the validity of this approach …

When others were talking about the decoupling of Asia, and even Europe, from the U.S., I stuck to my approach and predicted a global recession starting in the U.S.

Now I look at the leading economic indicators for the U.S. and do not see any signs of a pending recession …

I look at U.S. interest rates and do not see increases large enough to become a threat to either the economy or the stock market …

I look at the Fed and do not see any tightening steps that would put the economy or the stock market at risk …

I look at the stock market itself and do not see any typical technical deteriorations pointing to a major trend change …

Finally, I look at the sentiment indicators. And I see an intact wall of worry whose fissures have been repaired by what looks like a typical 10 percent correction.

What’s more, the structure of the chart below does not look like a beginning bear market to me!

S&P 500 Large Cap Index

Source: www. decisionpoint.com

So there you have it … stock market corrections from three regions of the world explained by vastly differing reasons. Debt worries, too much growth and too little growth. Whatever story fits best to falling stocks seems to be offered by the media.

But to me the current situation is typical for a correction in an ongoing, medium-term up trend.

We could easily see another week or two of shaky stock market behavior. And I expect that this correction will run its course relatively soon. Thereafter, January’s highs will quickly be in jeopardy.

Best wishes,

Claus

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules