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3/26/2012

The battle as to what will drive market prices may start to take on a new dimension in the coming months as some economic indicators are beginning to weaken a bit.

Last week, the Doc put the recent exuberant bullish stock move in perspective, sighting that much of the up-move was attributed to a nicely formed technical bull pattern in the NASDAQ composite and QQQ (ETF) markets.  This medium to long term technical bull pattern was riding off the coattails of some controversial but bullish economic data in the form of a reduction in the unemployment rate since late 2011. 

However, the tides may be slowly turning as to the rosy picture that has appeared to exist in the current mysterious recovery.  Last week, a bellwether company that is often sited as a barometer to economic activity, sounded some weakening economic alarms.  FedEx curbed its forecast for global economic growth, sighting a slowdown in Europe and rising oil prices as factors that would affect future earnings.  According to media reports, the company has “parked a number of planes”, pared flight hours and is reviewing capacity in light of a fall off in demand.

The question at this juncture to consider is that given this lackluster report for a major economic barometer…will more weakness be sighted in other industries?  And if so…will those blind speculators that only consider chart patterns begin to look over their shoulders and begin to consider the danger of trading technicals that are not backed by fundamental indicators?  It may just get a little messy out there. 

 

Stephan Kudyba (MBA, PhD)                      THE MARKET DOCTOR

 

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