What’s Going to Make Stocks Go Higher?

What’s Going to Make Stocks Go Higher?

 The stock market is doing what it does best…ignoring what appears to be reason and rationality, and climbing that wall of worry. 

 This is certainly not unusual. The reasoning is that when the market is too high, it is ripe for a decline because investors feel good about the world around them, become comfortable and are fully invested in the market. This leaves no ammunition to push the market higher. 

 On the flip side, when we are at a good buying point, there is generally bad or neutral news, and investors are unenthused. This pessimism creates liquidity as investors have substantial money on the sidelines ready to propel the market higher. 

 That’s why it seems to go down when you feel the best about things and go up when you feel the worst. Thus, making it difficult to buy low and sell high. It is hard to throw your hard-earned money at an investment when you don’t feel great about things, but that is often the time to do it!

 This is where we are right now. The threat of a global recession, a trade war with China, a federal reserve that seems clueless to the real world as well as a host of other headline issues that give you the willies. Although there is a lot to worry about, stocks are rising slowly but steady: climbing that wall.

 There is one more big headwind at the moment and we are smack dab in the middle of the pre-earnings nap period. That is the time just before the next earnings season where companies cannot talk about their stock. That is known as a black-out period. 

 During this time investors only have headline news to focus on, and that never provides a positive backdrop to life, never mind investing. 

 Corporate earnings will start to be released in a few weeks. Therefore, I expect a flat to slightly down market as pre-earnings warning announcements start to be publicized. Companies typically try to warn investors if they are going to miss their number, but seldom tell us when they expect to do better. 

 Once earnings begin, I suspect they will be much better than expected, which could easily bring new highs and the start of a strong 4th quarter. 

 This is a very difficult market, ever so important to be the expert or hire one. If we can help, even if you simply would like a 2nd opinion, give us a call. 

 

“Invest for need, not for greed!™”

 Cheers –Keith

916-925-8900

Smart Money Newsletter

Written By: Keith Springer

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