State of the Stock Market for the Week Ending April 12, 2014 (Stock Market 4-12-14)

Fear prevails in the Stock Market

Fear prevails in the stock market this week, as we closed out on a down note. The weekly numbers were not very good, as we saw the Dow off 2.4%, the S&P 500 off 2.7% and the Nasdaq down 3.1% for the week. We are still relatively flat for the year, but this week’s declines were not what the bullish camp wanted to see.

Earnings season has been positive so far, but the numbers have not been strong enough to drive the market higher. We are seeing a stalled out market that needs something to drive it higher, and we are just not seeing any drivers “driving anything” right now. We need strong earnings or more “stimulus” from the Fed if we want to see this market move higher.

The recent weakness in tech, biotech, and financials is worrisome, though, because it means that confidence in the broader market might be waning. These are key sectors and if they falter right now it might not be good for the overall market. Technology stocks have always been a bellwether for the broader stock market, so seeing some of the big names slide is a big warning sign if this slide were to continue.

Although fear prevails, market strategists are positive about the recent weakness we are seeing because they say we need a pullback, given the five-year bull market run. It has not been a wild-bull run, but it has been a pretty solid run nonetheless. It is historically rare to see five-year bull market rallies, so let’s just enjoy the rarity and enjoy the potential upside as long as it lasts.

The Fed seems ready, willing and able to do anything needed to keep our economy rolling forward, which is a huge plus. The interest rate hawks are hard to find, so that means that there is little chance the that Fed will raise rates anytime soon. A subdued Fed and no chance of rate hikes are bullish for stocks, and that is why this recent pullback might reverse.

Bulls are ready for a Summer Rally to kick in, but we will just need to see how earnings season unfolds. It has been “so-so” thus far, but we will just have to wait and see. In the meantime, enjoy the Spring season and the warmer weather. This Summer should be interesting and challenging for stocks, so get ready for whatever is coming our way. Happy weekend to all!

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