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2010-11-13

November 2010: The Stock Market Is Taking Break

The US stock market reached the highest level in two years after a strong two-month rally. However, good news about improving retail results and a four-month low jobless claims rate were unable to push the market higher. Since the current market is driven mostly by news, it was a relatively rare case when technical indicators were able to predict a downtrend. A massive insider selling was another factor that contributed to the decline. If the correction is deep, then a consequent cyclical reaction might send the market up again.

The GDP grew at a 2% pace in the third quarter that is slightly better than the 1.7% growth during the second quarter. The government says that the improvement of GDP-to-deficit ratio is the biggest since fiscal 1987 year. Many analysts expect that the US corporate earnings will aspire higher despite a weakening dollar and a slow-speed recovery will lead eventually to an economic normalization.