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8/18/2014

Well what do you know…only a mere 5% correction and the buying came in to support the market once again. 

This is no surprise to the Doc’s team despite the large number of analysts who jumped on the bear band wagon a couple of weeks ago.  Given the recent rally in stocks, it’s once again apparent that the over two year odd trend of closing your eyes and staying long remains the game. 

The interesting story to highlight is that just over a week or so ago, fundamentals in the US economy seemed so strong that the Fed began jawboning about hiking rates.  However it only took about a week for the outlook on the economy to weaken once again (e.g. rise in jobless claims, sputtering real estate market), and neutralize the hawkish comments.  This was probably the largest catalyst to stock strength.  Pessimism on global growth strengthened considerably as well, especially out of Europe.

Bottom line…the story remains the same…zero interest rate policy is funneling flows into stocks.  We’ll keep you posted when things really begin to change.

 

Stephan Kudyba (MBA, PhD)                      THE MARKET DOCTOR

 

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