When financial market internal momentum establishes a downward trend, headline fears can create more selling pressure and add to the market's troubles. In this commentary we'll look at the two kinds of fear confronting the market and what we might expect to see as the summer progresses.
Consumer deleveraging continues to be a hot topic in the mainstream press. This fear-laden focus could be a red-herring, however, a possibility we'll discuss in this commentary. Plus, an update on the latest action in the gold ETF.
There seems to be a consensus that the debt balloon has reached the point of no return. History has something entirely different to say on the matter, however.
I'd like to return to a theme we were discussing last week concerning our expectations for this year's upcoming 4-year cycle bottom. We touched on this in a recent commentary and we'll discuss it some more here. The theme I'd like to emphasize is that in years when the 4-year cycle bottoms (which always occurs in late September/early October) and the stock market takes a significant hit prior to the 4-year cycle time low, the bottom is in most cases made well before the late September/early October period and the market usually ends up outperforming for the rest of the year.
