Tax Reform in This Election Year: It's Not Likely
Which Credit Card Rewards Does the IRS Care About?"There are more cracks in the armor than at any time over the past couple of years," notes Charles Payne, editor of Wall Street Strategies, who observes, "All the angst has hit the fan." He explains, "All the would-be negatives that have been in place for the past year continue to fuel anxiety."
The advisor points to housing sales, higher oil, and the evolving credit crunch as factors sending investors "into the hills, while others are in the game but with one foot in and one foot out."
The result of this scenario, he says, is "amazing volatility." The irony, he notes, is that this action comes in the face of "mostly fantastic earnings results."
As for the overall market, he notes, "It just seems like all the worries have manifested into a crescendo that will force stocks lower." But, he questions if there may be a silver lining.
Indeed, he says, "Just four weeks ago the greatest worry for investors was higher interest rates. How interesting it is that the market has become choppier and more volatile even as rates have steadily come down."
Payne continues, "Sure, Wall Street likes to worry, no matter what the circumstance. The greatest threat to equities was higher interest rates back then, but today it may be the economy is growing too slowly. Be that as it may, lower rates bode well for the economy, and for stocks, too."
Putting today's market action into an analogy, he says, "The long awaited feeding frenzy has begun, and it's like a scene from the famous river migration of millions of wildebeest and zebra between Kenya and Tanzania. Laying in wait are giant crocodiles, big cats, and other carnivores."
But, he adds, "The migration occurs because of the change of seasons which force the movement of these incredible herds to grassier plains. While I don't think today's action is life or death, it does mark a change in the season."
He continues, "The cloud of uncertainty isn't going to move away overnight. The last major test of the market back in February was a short lived affair, however. This one could drag out longer." He adds, "This feeding frenzy will last as long as it takes to adjust rationale and rethink investment theses."
As for specific price levels, he notes that the next significant support point for the Dow is 13,400, and then the area just north of 13,200. Meanwhile, he concludes, "Stocks are still cheap, and obviously getting cheaper by the minute."
Each day, Steven Halpern's TheStockAdvisors.com features the latest investment ideas and market commentary from the financial newsletter community.
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