Although market appears to have support on bottom, there is not much buying from bargain hunters. Many market participants still prefer to hold cash on fear of a market collapse. The Euro zone crisis continues to weigh down market. Market participants are afraid that market manipulators will use the European sovereign debt crisis to drag down market. However the high cash level and low stock valuation discourages stock holders to dump shares for cash which provides mere return in a low interest rate environment.
Investors are still very cautious and hesitate to enter market despite sign of market stabilization. Investors confidence is low and market can be easily manipulated. The Euro zone crisis and US rating can be used as news by market manipulators to drive market to herd into fear.
When market fell in last year on US rating downgrade and European sovereign debt meltdown, some investors who sold early after market reached peak still made profit. However many investors who sold late after steep fall incurred significant loss. Fear of market meltdown created panic selling. Many investors suffered again after the 2008 financial crisis.
The same factors again come into existence lately. Learning from previous experience, market participants are pessimistic in market outlook. However, investors currently have the least percentage of holding in stocks since the financial meltdown in 2008 but with an increase of net worth from savings and wealth effect. Probability of panic selling is low unless market is shocked by unexpected catastrophe. Liquidity is ample due to Federal Reserve quantitative easing policy. Although the Euro zone crisis is worse than last year and Greece is close to default, traders and market manipulators are only selling selectively on bad news and do not aggressively short sell market as in last year when market participants herded into panic selling.
Market participants are waiting with patience to exploit the cash on hand. Traders and market manipulators incline to drag market down for profit while institutional and individual investors are ready to pick up bargain if market collapses.
Number of millionaires see a decline in wealth
The number of millionaires is on the decline in the United States, even as the number of wealthy individuals has increased worldwide.
The group expects to see more of the mega-rich crop up across Asia in the near future.
"Wealth in the region is expected to continue to grow at a double-digit rate... reaching $40.1 trillion by the end of 2016, at which time it will have slightly overtaken Western and Eastern Europe combined."
Market Rally Is Brewing, Don’t Get Scared Out of Stocks: Ilczyszyn
Rich Ilczyszyn, founder and CEO of iiTrader.com, says selling stocks here is dead, flat wrong. For one thing equities are the best alternative in a dodgy lot. The US 10yr has a 1.5% yield and stocks are down 10% in the last 2 months. If you haven't sold yet you missed your window.
Ilczyszyn says it's time to start looking for value plays. Once you find them he suggests "you have to put on your trading cap" and start buying. The concerns from the other side of the Atlantic are known and priced in to the point that almost any news will be regarded as positive.
Citing the IMF, G-7 and any other number of Central Bank meetings happening, this week Ilcyszyn says we're bound to hear something that stabilizes the market. More neutral news flow, coupled with a close back above the 200-day Moving Average at about 1,285 on the S&P500 would be "the green light."
Stay balanced in terms of risks, buy what you know in equities, and don't get scared out of stocks by the negative headlines. Be brave when others are fearful, in other words. It's conservative advice from someone wearing a trading jacket; maybe that's what makes it so good.
Return of the McMansion?
After trending down during the recession, new homes are getting bigger again, according to a recent report from the U.S. Census Bureau.
"We've been a little surprised that home size has been going back up again," says David Crowe, chief economist at the National Association of Home Builders.
"The customer who's buying a new home now is the only one who can get credit approval for a mortgage, [they are] economically comfortable and are therefore picking the house that they want," Crowe says. "We've essentially eliminated a customer that would've wanted smaller homes because that's all they could afford."
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