Rev Shark: "More Worries Lie Ahead"
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Rev Shark: "More Worries Lie Ahead"
"More Worries Lie Ahead"
By Rev Shark
RealMoney.com Contributor
9/4/2007 7:19 AM EDT
"The ultimate measure of a man is not where he stands in moments of comfort, but where he stands at times of challenge and controversy. "-- Martin Luther King Jr.
"The market always presents us with challenges and controversies, but we kick off the month of September with far more than the usual amount. What makes things particularly tricky is that despite significant negative news in the credit markets and about subprime lending in particular, the major indices closed positively in the month of August.
Our challenge is to try to reconcile the generally positive market action in recent weeks with the fact that there are some significant issues out there. We have to ask whether the market has priced in the negatives and whether there are sufficient positives to keep things moving higher.
The market got a boost on Friday after both President Bush and Fed Chairman Ben Bernanke offered up hope that the feds would be standing by to help out if subprime mortgage issues spread. The market seems to have accepted the belief that things are contained and that the fallout to the broad stock market will remain muted.
There is no question that the real estate market is struggling, but the view of many market participants is that it will not be a major drag on the stock market. The main argument for that proposition is that while the domestic economy may be a bit soft, there is plenty of strength in the international economy.
Perhaps that is so, but what makes that thinking rather troubling is that so many are embracing it as we are still trying to determine the ultimate cost of the credit issues. As a story in Barron's illustrated this weekend, not only do eight high-profile market strategists expect the market to hold up, but on average they expect it to be 6.4% higher by the end of the year than it is today.
That sort of sanguine thinking as we kick off the historically weak month of September and attempt to dismiss the recent problems should give us pause. The market has done a nice job of coming back from dips several times over the past year or so, but too many are thinking we will pull that off yet again, and that should makes us at least a little nervous.
Before we become too optimistic, it is very important to keep in mind that the major indices are still technically troubled. Although we pulled off a very strong bounce after the mid-August scare, we have not repaired the damage. We are hitting up against significant resistance levels, and while the Nasdaq 100 looks pretty good, the small-cap indices have lagged badly.
We have challenges and difficulties in front of us and we can't be too sanguine at this point. The problems that recently hit this market have not suddenly disappeared.
Early indications are mixed as the news flow is slow. "
(in www.reamoney.com)
By Rev Shark
RealMoney.com Contributor
9/4/2007 7:19 AM EDT
"The ultimate measure of a man is not where he stands in moments of comfort, but where he stands at times of challenge and controversy. "-- Martin Luther King Jr.
"The market always presents us with challenges and controversies, but we kick off the month of September with far more than the usual amount. What makes things particularly tricky is that despite significant negative news in the credit markets and about subprime lending in particular, the major indices closed positively in the month of August.
Our challenge is to try to reconcile the generally positive market action in recent weeks with the fact that there are some significant issues out there. We have to ask whether the market has priced in the negatives and whether there are sufficient positives to keep things moving higher.
The market got a boost on Friday after both President Bush and Fed Chairman Ben Bernanke offered up hope that the feds would be standing by to help out if subprime mortgage issues spread. The market seems to have accepted the belief that things are contained and that the fallout to the broad stock market will remain muted.
There is no question that the real estate market is struggling, but the view of many market participants is that it will not be a major drag on the stock market. The main argument for that proposition is that while the domestic economy may be a bit soft, there is plenty of strength in the international economy.
Perhaps that is so, but what makes that thinking rather troubling is that so many are embracing it as we are still trying to determine the ultimate cost of the credit issues. As a story in Barron's illustrated this weekend, not only do eight high-profile market strategists expect the market to hold up, but on average they expect it to be 6.4% higher by the end of the year than it is today.
That sort of sanguine thinking as we kick off the historically weak month of September and attempt to dismiss the recent problems should give us pause. The market has done a nice job of coming back from dips several times over the past year or so, but too many are thinking we will pull that off yet again, and that should makes us at least a little nervous.
Before we become too optimistic, it is very important to keep in mind that the major indices are still technically troubled. Although we pulled off a very strong bounce after the mid-August scare, we have not repaired the damage. We are hitting up against significant resistance levels, and while the Nasdaq 100 looks pretty good, the small-cap indices have lagged badly.
We have challenges and difficulties in front of us and we can't be too sanguine at this point. The problems that recently hit this market have not suddenly disappeared.
Early indications are mixed as the news flow is slow. "
(in www.reamoney.com)
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