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Another view of the bears and the bulls

By Dian Vujovich

Stocks started the week on a high note and with more earnings reports coming in, perhaps that trend will continue. Until the week comes to close, however, we won’t know for sure.

Three things we do know for sure is the enthusiasm those in the financial media show no matter what’s going on, that the market is fickle and a case for the bears and the bulls can often be made.

I came across this piece by Sy Harding at SeekingAlpha.com titled, “Buy The Dip Or Sell The Rally” that confirms those points. Regarding the S&P500s performance last week he writes: “The financial media is excitedly pointing out that this is the best week for the S&P 500 since July 2013. Just two weeks ago, it was the worst week since May 2012.”

To be fair, perhaps we all ought to be kinder on the financial media. But for some reason it’s easier to pick on it than actually swallow the reality that market winds blow in directions no one has ever been able to accurately calculate.

Back to Harding’s piece. In it he gives both a case for thinking like a bear and a bull. Below are a few snippets from his column addressing each.

First, a few for those with bullish thinking he writes:” The economic recovery from the Great Recession continues; the Fed promises to keep rates low until the economy strengthens more; earnings continue to meet or beat Wall Street estimates; corporations are buying back their stock, decreasing the supply; oil and energy costs are plunging, leaving consumers with more disposable income; and interest rates so low, there’s no place for investors other than in stocks.”

Prefer a bearish argument and Harding writes:” The recovery remains as anemic as it has been for the last five years. The Fed is ending QE stimulus on which the economy has been dependent. Every time the Fed let QE stimulus expire, the market and economy stumbled until they re-instated it.

And, given that the “economies of America’s largest global trading partners are in trouble”, that the “ 18-nation eurozone is potentially even sliding back into recession.”

Plus, while earnings are beating Wall Street’s estimates, “Actual earnings growth is slowing.”

Harding adds that while corporations are spending their cash to buy back their stock, that move “artificially manipulates the P/E ratio of a company”.Something he thinks is “ not a positive for the economy” and is “an activity usually seen near the end of bull markets.”

Harding’s piece is worth a read–charts and all. Find it at: http://preview.tinyurl.com/o3fwtwj . Or, http://seekingalpha.com/article/2598385-buy-the-dip-or-sell-the-rally.


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