There might be a little bounce to test the same support line that was broken on the S&P 500, but if the irrationality of living off more printed money stays out of the markets, the stock market rally shouldn’t continue.
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New York, NY (PRWEB) October 21, 2012
Michael Lombardi, financial expert and lead contributor to leading financial newsletter Profit Confidential, reports that the S&P 500 has risen significantly since the stock market rally began, soaring higher in June in the hopes of a third round of quantitative easing (QE3). However, Lombardi also points out that the S&P 500 has recently broke below its lower trendline due to the selloff in the stock market. According to Lombardi, reality is kicking in for the magnificent stock market rally, and the selloff on key stock indices over the past couple of days has resulted in technical developments that are worth noting.
In the article “If You Believe in the ‘Trend Is Your Friend,’ You Won’t Like This Chart,” Lombardi notes that, in hindsight, the S&P 500 was forming a rising wedge pattern—successive non-convincing highs with a narrowing trading range. He explains that the S&P 500 index’s move below the trendline suggests a breakdown and changing of direction.
“There might be a little bounce to test the same support line that was broken on the S&P 500, but if the irrationality of living off more printed money stays out of the markets, the stock market rally shouldn’t continue,” the Profit Confidential expert reasons.
Lombardi believes that there are not many reasons for this stock market rally to continue, though he considers a fourth round of quantitative easing (QE4) possible.
In conclusion, Lombardi states his belief that the reasons the market is overvalued and simply a “bear trap” include insider selling, low trading volume, and contracting revenue growth among other reasons.
Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market... before it plunged.
Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
To see the full article and to learn more about Profit Confidential, visit http://www.profitconfidential.com.
Profit Confidential is Lombardi Publishing Corporation’s free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit http://www.profitconfidential.com.
Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi’s current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.