New York, NY (PRWEB) October 14, 2012
According to Michael Lombardi, financial expert and lead contributor to Profit Confidential, while some well-known stock advisors are saying the stock market rally will continue and are telling their clients to buy, they may be ignoring the underlying issues of the market. Even though the uptrend on the S&P 500 continues, Lombardi states that the fundamentals are screaming that this will not be the case for too long. Lombardi explains why the bear market rally that began in 2009 is quickly losing momentum and QE3 isn’t working.
Lombardi suggests that a third round of quantitative easing (QE3) will have the same stock market rally effect when compared to the first and second rounds of quantitative easing by the Federal Reserve. Since the announcement of QE3 was widely expected by the stock market, Lombardi notes that the unknown “news” that gave stocks a lift was that the Fed didn’t announce an end date for QE3.
Lombardi asks, “Now, with the fundamental economic data being released so weak, what will propel stocks higher? QE4?”
In the article “Why QE3 Hasn’t Delivered the Same Stock Rally We Got After QE1, QE2,” Lombardi reports that a key indicator called the “Volatility Index” (VIX)—also called the “fear index” for the S&P 500—is showing some interesting developments.
“The S&P 500 and VIX have an inverse relationship. When the S&P 500 goes up, the VIX goes down,” explains Lombardi. “When the S&P 500 reached a new 52-week high in mid-September, historically, because of their inverse relationship, the VIX should have gone lower, but it failed to make new lows.”
Lombardi now cautions advocates of the S&P 500 reaching 1,500, noting that while the stock market rally continued, volume in the S&P 500 was decreasing, insiders were selling their stakes in the companies they work for, and the VIX was working against the market.
“These are all not the signs of a healthy stock market rally,” Lombardi concludes.
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.