You no doubt have heard about Goldman Sachs' forecast for
another correction this year. This is a global strategy group that
is sticking to their guns from an earlier call this year.
Given the 200-point run up to 1470, slowing earnings, and an
approaching Fiscal Cliff, it's not hard to see why they would
reaffirm their case last week.
But this market is trading on lots of discounted bad news. And
it still remains strong. Fund managers aren't running scared. They
While the market is at risk here of falling back (we haven't had
a good volatility scare to shake the tree in a while), I still
believe we make new highs this year and that S&P 1400 will
be strong support.
I do not cite 1400 because of the "round number" psychological
effect, but because of all the work already done at 1390 this year
and then because we sat on 1400 for the entire month of August
before Draghi "saved the euro."
If big investors were really scared of the earnings onslaught we
are about to get in the next 3 weeks, or of the looming Fiscal
Cliff, we'd already be a lot lower I think.
It doesn't mean we can't get those fear-driven sell-offs on some
bad earnings reports. I just think the market price action
continues to make the case here for a break-out to the upside.
If I'm wrong, then this will be a very interesting top indeed.
But I want to hear what other investors think.
Is the risk/reward right now in this market tilted strongly in
favor of another correction?
SPDR-DJ IND AVG (DIA): ETF Research Reports
SPDR-GOLD TRUST (GLD): ETF Research Reports
ISHARES TR-2000 (IWM): ETF Research Reports
SPDR-SP 500 TR (SPY): ETF Research Reports
(VIX): ETF Research Reports
To read this article on Zacks.com click here.