With recent grim economic news and significant technical damage inflicted upon major indexes,
everyday investors and professional traders alike are wondering if recent events are a simple correction or the harbinger of a new bear market.
Looking at the world on a fundamental basis, one cannot help but wonder if the stock market can find the power to sustain another leg higher. Negative factors include:
The imminent end of quantitative easing and its impact on risk assets.
A cascading, unrelenting stream of economic reports that indicate a significant economic slowdown developing in the U.S. along with persistent high unemployment.
Strenuous efforts by Chinese authorities to combat inflation and slow the growth in China, which will likely act as a drag on global demand.
Ongoing problems with the aftershock of the earthquake and tsunami in Japan and its negative effects on that country’s economy and global demand from the world’s third-largest economy.
The escalating showdown between Germany and the European Central Bank over how to resolve the Grecian debt problems that just won’t seem to go away.
The recent outflow of money from equity funds and into money markets.The ever louder ticking of the countdown clock to the August 2nd deadline for raising the debt ceiling and the possibility of aU.S. default.
The technical indicators look just as glum as demonstrated in the S&P 500 chart below:
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