New Highs in the Stock Market (7/19/07)

Summary of the Stock Market.

1. Valuations are reasonable with the S&P 500 trading at 15 times 12-month forward earnings.
2. Earnings growth has peaked but it continues to outperform expectations.
3. The benign inflation outlook means that interest rates will not rise to punitive levels.
4. The re-leveraging of corporate balance sheets favors equity holders over bond holders.

Most analysts remain bullish on US equities for a variety of reasons. but the easy money in stocks has already been made, and that risk and volatility will continue to increase in the months ahead.
So the professionals are still looking at things with the bent to be cautious. It is still climbing the wall of worry.

Yes I know that I am predicting a correction and it will come so quick that you will be afraid to sell when it is going down.
Maybe now you should tighten up your stops to protect your profits.


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Assigned to category: Stocks
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