Profit Confidential Expert Reports: Stock Market Rally Slowly Shifting Following Continued Rise in Key Stock Indices

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Michael Lombardi, financial expert and lead contributor to Profit Confidential, reports that since June of this year, the S&P 500 and other key stock indices have risen significantly. According to Lombardi, the fact of the matter is that the U.S. economy is currently in a secular bear market, and the bear stock market rally witnessed since 2009 is slowly shifting gears.

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Profit Confidential Expert Reports: Stock Market Rally Slowly Shifting Following Continued Rise in Key Stock Indices

“…bear market rallies can go on for a long time, but irrationality does eventually go out of the markets,” notes Lombardi, “and when reality kicks in, it takes all the pride and glory with it.”

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Michael Lombardi, financial expert and lead contributor to Profit Confidential, reports that since June of this year, the S&P 500 and other key stock indices have risen significantly. According to Lombardi, the fact of the matter is that the U.S. economy is currently in a secular bear market, and the bear stock market rally witnessed since 2009 is slowly shifting gears.

“…bear market rallies can go on for a long time, but irrationality does eventually go out of the markets,” notes Lombardi, “and when reality kicks in, it takes all the pride and glory with it.”

Lombardi points to participation and rising future expectations as the most important ingredients for a stock market rally.

“At one point in an economy, things may look bad, but if future growth expectations are good, then a stock market rally can be justified,” reasons Lombardi. “But in the current stock market rally, the participation is decreasing and the future expectations are awful at the very best.”

In the article “Reality Kicking into the Stock Market,” the Profit Confidential expert reports that in the last week of September, while the stock market rally continued, investors pulled $5.1 billion out of U.S. stock market mutual funds.

“In the first week of October, again as the stock market rally continued, there was a net outflow of $10.6 billion from U.S. stock market mutual funds,” Lombardi points out. “That’s an increase of 106% in outflows in one week.” (Source: Investment Company Institute, October 10, 2012.)

Lombardi notes that individual investors are usually wrong about the stock market: “If they are pulling money out, contrarian investing tells us key market indicators should rise. But at the rate money is coming out of the stock market, stocks have to be sold to generate cash to give money back to investors. Selling puts pressure on stock prices to go down.”

The Profit Confidential expert believes that if you take the Federal Reserve’s money printing out of the picture, companies are struggling in the current economic environment, as many companies used cost cutting to show rising profits.

Lombardi concludes that several traditional indicators continue to flash warning signals with this stock market rally, including the Dow Theory, stocks rising on lighter volume, and corporate insiders selling stock at a record pace.

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.

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