When an investor conducts stock market analysis, there are many variables to consider. Stock market analysis involves researching the health of the company, as well as the overall market trends. One method for stock market analysis is to look at the fundamentals of the company, which include the firm’s earnings and revenue, as well as other metrics, such as its price-to-earnings (P/E) ratio. Another form of stock market analysis is to study the charts. Stock market analysis through charts involves looking for patterns that tend to repeat over time.
For me, trading has always revolved around economic fundamentals and stock market analysis. And if you’re like me, you’re getting somewhat irritated with the recent trading in the stock market by investors who seem more inclined to trade on what economists at the Federal Reserve do with their quantitative easing strategy than on what’s really important—the underlying fundamentals of the economy and corporate America’s financial health.
The reality is that corporate America is struggling to grow revenues. This means that companies and consumers aren’t spending at levels that make me comfortable with the economy. Of course, the stock market doesn’t really seem to care; it simply wants the flow of cheap money to continue.
In my view, it’s the same old thing that continues to engulf the trading in the stock market, and it’s annoying. For instance, if we see strong non-jobs economic data, the stock market edges higher. If we see signs of strengthening in the jobs market, the stock market sells off.
Of course, that’s because the Fed has made it clear that jobs creation is the focal point that will dictate when the central bank will begin to taper its monthly bond buying program, an unprecedented policy that has added trillions of dollars of debt to the bank’s balance sheet.
While all eyes will be on the non-farm payrolls reading today, November’s ADP Employment Change reading released last Wednesday showed that 215,000 new jobs were created last month, which is well above the consensus estimate of 173,000 and the upwardly revised 184,000 jobs created in October. How did the stock market react to the good news? Negatively, … Read More
October was ghoulish for stocks, with technology and small-cap companies facing the brunt of the market selling as investors sold and avoided higher-risk growth stocks, based on my stock market analysis.
The first quarter was excellent for stocks, but since it ended, the trading action has been mixed, with the S&P 500 moving lower in four months and higher in three months. The DOW, NASDAQ, and Russell 2000 have been negative since the end of March.
My stock market analysis shows me that we are currently at a standstill and waiting for a fresh catalyst to attract buyers. With Black Friday and the key holiday shopping season around the corner, things will likely pick up.
If you are into historical tendencies, we are entering the best six months of the year for investment gains, according to the Stock Trader’s Almanac. Based on historical records, investing during the six months from November to May has produced the best returns for stocks versus the June to October period. But things could be different this time around given the abundant risk, including the financial crisis in the eurozone, fears of more stalling in China, tension in the Middle East, the U.S. presidential election, and the upcoming fiscal cliff.
The near-term technical picture shows difficult chart resistance. The NASDAQ, S&P 500, and Dow Jones Industrials are stuck at below their respective 50-day moving averages (MAs) and looking for support at their 200-day MAs amid a lack of trading interest, according to my stock market analysis.
My stock market analysis of the S&P 500 shows a multi-year upward move. There’s some near-term topping action and … Read More