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8/4/2014

Well it was good timing for the Doc’s team to come back and get active on the markets as the major Stocks indexes experienced some serious turbulence last week.  The media pundits seemed to blame the noteworthy slide in stocks on the Argentinian insolvency issue, however reality is that this was most likely not the catalyst for the downside pressure. 

What is transpiring is a tricky situation for those who have utilized US equities as a source of stimulus for economic activity.  Recent fundamentals, as measured by job creation and price increases, have spooked the zero interest rate policy makers in to talking about hiking rates.  It is this conundrum that threw a monkey wrench into the preverbal bull scenario for stocks.  Of course, issues of great uncertainty around the globe and a quickly approaching November election in the US is playing a part as well.  Bottom line is that as strong as some indicators may imply for a strong US recovery…a return to normal interest rate policy may quickly turn the recent positives into significant negatives.

As far as market direction is concerned…the bull move in Stocks has been so strong that last week’s sell-off hasn’t breached any longer term negative indicators yet.  So we will say…bumpy for now, with a major increase in underlying risk.

 

Stephan Kudyba (MBA, PhD)                      THE MARKET DOCTOR

 

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