It’s not looking to hot in the world of stocks at the moment. A big fall in US indices yesterday is being followed by another big drop in Europe today, with everything down 1% or more.
European stocks 10 10 2014
But we’ve been here many times before right? Too many times to mention over the years, so is this time different? In my mind it’s finally coming home to roost that the growth train isn’t all it was expected to be. With Europe going backwards and any hopes of ECB QE light years away, there’s no support there. The US is coming to the end of the QE gravy train and stock prices are going to have to be supported on good old fashioned business earnings and profits.
All we’ve had recently is growth forecasts cut back and a weak picture painted across the globe. That has hit sentiment and possibly finally shaken a few people back into reality.
It’s been hard work and often painful to bet against stocks over the last 5/6 years but the stars do seem to be aligning for a bearish picture. Taking the Dax as one example, and looking at a longer term view, there’s certainly some scope for some very big moves.
Dax daily 10 10 2014
I don’t think we’re anywhere close to some sort of crash but we are well overdue a big correction. Unless sentiment really changes for the better selling rallies (as hard as that’s been for some) is probably the better trade on balance.
