I had this idea last night. I decided to list the upside catalysts and the downside risks to the market right now. Here we go,
Upside Catalysts:
- corporate earnings are strong
- S&P 500 multiples are low (versus interest rates and yields)
- a bullish inertia on the stock market for the last 2 and a half years
Downside Risks:
- debt ceiling deal/ no deal causes markets to panic
- seasonality is weak till mid-october
- the economy has showed some signs of slowdown
- ECRI`s leading indicators are showing an economic slowdown
- markets are close to multi-year highs
- 1 Month ROC, 10-day SMA and 50-day SMA spreads show market prone to a correction
- no ongoing QE - the Fed is not buying securities in the market since June 30
- no more QE ahead (my personal view)
- fiscal stimulus is off of the table
- austerity is just arriving to the US (look at what has happened to the United Kingdom over the last year or so)
Have a great day!
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