Divergence of Transportation Sector From Broader Market Means139 views 2012-09-25 00:18 Tags: xml false
“The divergence became apparent mid-July, when oil prices recovered from their recent correction,” reports Clark. But Clark thinks the divergence is due to more than just higher oil prices; he believes it’s emblematic of a stock market that’s losing its momentum.
that the Dow Jones Industrials, the S&P 500 Index, and the NASDAQ Composite
are up substantially already this year, and this doesn’t include dividends.
“It’s a very tough
environment in which to make predictions about the stock market,” says Clark. “There are just too many unknowns out there, and
that’s why so many dividend paying stocks, like those in the Dow Jones
Industrials, have done well this year. All of the uncertainty is making stock
market investors very conservative.”
As such, Clark argues
that all eventualities for the U.S.
economy and the stock market are possible going into 2013.
“The Federal Reserve
continues to flood the U.S.
monetary system with cash, and interest rates are artificially low,” Clark points out. “Economic news regarding the U.S. housing
market is showing improvement, but overall employment is not.”
Clark does believe that corporate balance sheets are
very solid at this time, and stock market valuations are reasonable.
include the fiscal cliff in the U.S.,
the sovereign debt crisis in the eurozone, and geopolitical uncertainty
regarding Syria and Iran,” reports Clark.
corporations have never been better.”
Clark concludes that the divergence between the Dow Jones Industrials and the Dow Jones Transportation Index is worrisome, and for the broader market to really advance, transportation stocks will have to accelerate.
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