What Happened In The Stock Market?
That seems the be the number one question on people’s minds these days. Here’s a little information to help you at understanding the stock market better.
According to the government and Wall Street, the economy is recovering, but is that really possible with all the information that coming out lately? We hear about unemployment, foreclosures, nationalized services and so much more that are not doing so well.
The stock market will have one hell of a week ahead with a barrage of earning reports coming out this week. as well as some economic reports. I expect the markets to go up this entire week, the reason is that the forecasts for this quarter were kept low along with many analysts playing it safe by going with a company’s forecast. When forecasts are kept low and the company reports better-than-expected, the stock price will rise. 2010 has been expected to have a 3% economic growth for the year and at the current pace, we’ve already exceeded that number.
With that in mind, I look forward to good things to come this week in the stock markets. I also know enough to know that it won’t last. The markets have moved up too much over the last year without any real evidence of a recovery. Too many companies are at their 52 week-high, which means that there might be very little gains left to be made, if any at all. The “smart money” is already in the markets and are getting ready to bail out. Don’t be one of the “average Joes” that try to chase a stock, only to take the plunge as everyone else has made the big gains and are getting out. Look for a pull-back in the major indicies before getting in. I consider a 6-9% pull-back to be healthy and the right time to start building a position in companies that you’ve been keeping an eye on.
The real move downward will be in the summer months when I expect to see the real estate have three negative reports in a row. The good numbers that we are seeing currently is because of the first-time home buyers credit from the government will end at the end of April. Once investors see that the sales were only good because of the tax credit along with the steady unemployment rate, Wall Street will see that the Emperor has no clothes on.
Understanding the stock market isn’t hard, but it does take time. There are too many variables to actually get it right all the time, but if you look at those variables and other stock investing tips promoted here, it will help you get it right most of the time.
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