Is The Stock Market Due For A Pause?
When you check out the stock market today, you will see it has almost reached 11,000. That is way up from just a year ago when it was all the way down to under 7,000. If you bought stocks anytime last year, you are probably happy you did.
It is likely that many people have forgotten how bad everything was just a bit over a year ago and it is reasonable to assume the market has recovered too fast. Any new investor trying to learn how to buy stocks online for the first time in all probability does have any idea of all the punishment folks took in their 401k’s and IRA’s. People lost a lot of money and many of them have not come close to recouping their losses.
Investors log onto the Web all the time trying to find what are the best stocks to buy right now. They may not take into consideration the overall well being of the market and the bad state of the U.S. economy. After all, in a giant down market, even a potentially hot stock will probably not go up. With all the political unrest, companies struggling to keep workers, the foreclosure crises, and jobs being lacking everywhere, it is difficult to imagine how this market can continue to go up.
One of many components that helps the stock market is the fact that interest rates are so low. If you have money and need to get some type of a good return, you really can’t put it in a bank certificate of deposit or in Treasuries because they pay next to nothing. Placing your cash in stocks is about the only place you may have at least some possibility of a return. If you do put new money into stocks though, you should be prepared to see the market go down if things in the U.S. economy don’t start to turn around soon.
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Every technical analysis I have done on the market (I have been doing this for over 10 years) tells me the market is going to have at least a 7 percent pullback. That said when all technical indicators line up perfectly, as is the case at this time, I am most often wrong.