US Stock market ready for some volatility

Posted: June 5, 2014 in Uncategorized
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Now we are in June, with July, one of the most risky period for the market.

From April, in the US, there has been a constant flight to safety by the various managers (they practically moved from small stocks and tech to large SP500).

We are also at the highest level of Buyback ever (beating even the last top…casually 2007) which “fakely” improves the earning per share and also decreases the number of shares available.

This makes the SP500 go higher…but in a risky way

So we have several divergences.

-Higher SP 500 / low volatility and stretched valuations / very far from the moving average 200

-Lower Russell 2000 with high volatility

– Nasdaq very volatile

– Bond indicating a much weaker economy than the SP500 suggests.

In the last 56 years, when this situation happened the SP lost between 12 and 18% between June and July.

 

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