U.S. Markets open in 3 hrs 27 mins

What Catalyst Ends this Slump?

John Blank

 

Real Time Insights help an investor see -- by showing what all investors see.  An obvious use has fallen upon us (pun intended). 

An Avalanche of Sell Orders!

My forward-looking query: To Editors and Subscribers alike... 

What fundamental catalyst moves first to END this slump?

(1) AAPL’s share price rises.  AAPL stock started to decline in mid-September, after it topped at over $700 a share.  It closed yesterday below $540 a share, a -20% plunge.  Given its huge market cap in the NASDAQ, its effect on the IT sector, and as a bellwether generally, one catalyst to the stock market -- a recovery in AAPL.

(2) Bond yields crumble in Southern Europe. In early September, a steep decline in the Spanish 10-year rate was a positive catalyst, going from over 7% all the way down to a 5.3% rate.  Unfortunately, since mid-October, this cornerstone indicator of European macro and financial stability has risen to 5.8%. Spanish authorities are holding up agreements to get European-wide aid.  They worry about strings attached.  How about a deal?

(3) Fiscal cliff resolved.   Wake up Government!  Investors are reacting negatively to the potential for a blown budget deal, followed by recession.  Sell stocks now and buy them back later, after January.  It looks smarter than hold and ride it out.  

(4) China stimulates.  Not co-incidentally, I think, the 10-year Communist Part Congress convened this week.  This is yet another source of uncertainty.  Decisions can be a positive catalyst.

(5) Good old-fashioned positive U.S. economic data.  Did anyone notice consumer sentiment hit a five-year high, and weekly claims data was very positive this week?

(6) Get it, John, we do not end the slump!  This is a bear market, not a correction.

(7) The slump is already over.

Finally…

How soon does your chosen catalyst materialize?  At what level does the S&P 500 sit when the corner is turned?

I hope to chime in merrily along our way.

Read the analyst report on SPY GSPCU

Zacks Investment Research



More From Zacks.com