Stock Market Commentary: For the Week of June 25th, 2012

June 25, 2012 - PRLog -- Market Commentary: Week of June 25th, 2012

The S&P 500 Index traded just above the range we expected for its peak last week, just before it turned south, mostly on European Debt worries and some on US Economic news.  The markets will be thrown around for a while before something shakes out.  The markets like certainty and they are not getting it right now.  In addition to the uncertainty of the markets, Corporate Earnings Season is only a few weeks away and there are several whispers corporations will lowering guidance in anticipation of the several multi-national corporations getting hit from the European downturn.  There are some reputable economists that are looking for a European recession to begin in Q4 of this year and take our economy down with it in the first half of 2013.

All sectors will pull back from the downturn, but immediately look for the Retail, Financials and Energy sectors to get hit the hardest.  Retail has been doing very well lately, but overbought conditions are showing at least a 3%-5% pullback over the next few weeks.  Financials can't seem to get any footing in price action and as we've been saying for a while, this sector is dead money.  It will be years before the financials are able to truly make the money they were 5-7 years ago and the economy needs to turn around in order for that to happen.  They will start charging more fees to their customers because housing and loan growth isn't there.  Mergers and acquistions are not happening at the rate they once were and the IPO has slowed to a crawl.  Also, many investors are leary about the our domestic bank exposure to the European debt crisis.  The Energy sector has been beaten up over the last several months with the anticipation of the slowdown in the global economy.  Even with the summer months upon us, don't expect Oil to get to $100 soon (other than a geo-political event).  This means gasoline prices should be coming down even more.

When we work with clients, people fear the market more so now than a year ago, so prudence is typically the best practice and approach.  There are many fixed income considerations along with short-term Corporate Bonds and ETF's that should be considered along with some Preferred stocks of the Blue Chip companies.  Despite the weakening market, your money can still work for you by diversifying properly.

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