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Economic Review |
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6/30/2010 US Equities getting slammed again….Surprised you say? Wake up and smell the coffee! Over the past couple of weeks, the major US Stock Indexes have dropped some 5% in price, sending the Dow Jones back under the 10,000 mark again. The only surprise that this should evoke to market followers is how long it took for the indexes to get back down to more realistic levels. The exuberance and hype about an economic recovery have been blown around the world of investments for just about a year now and price action in stocks did support this jawboning for much of that time. However, the reality of the almost unbelievable rally in Stocks ending just a few months ago is that it was done on thin volume, where speculative trades have dictated direction. So when the major Indexes suddenly give back over 5% in just over a week, there really should be no surprise. Thin volume and speculative forces pushing prices higher are never a solid underpinning for sustained gains. Stocks remain a high risk sector. Prices can go up at some point again, but the quality of investment flows needs to be considered. By the way…to all those supporters of a sustained economic recovery….be careful, looks like another dip is taking place. Let’s just call it the big W. The Market Doctor team has been warning of this for some time.
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| Stephan Kudyba (MBA, PhD) THE MARKET DOCTOR |
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