The factors that have moved the market up for the last
five years are eroding. Contrary to
popular conception, the economy shows no sign of entering a new phase of more
robust growth. Quantitative Easing (QE)
is being gradually withdrawn, and on its current schedule, will end by
November. Technically, the market has
shown significant signs of topping out.
In the absence of stronger economic growth, corporations will have a difficult
time increasing earnings. The market is
substantially overvalued by historical standards.
A number of key economic indicators have now been
reported for March or April, and is not encouraging for investors expecting a
big bounce back from the cold winter.
The housing market was particularly disappointing. [More]