Global Markets and Nasdaq Composite Report -A Correction is always better than the Formation of a new Bubble
Recently the US stock-markets have witnessed significant selling pressure along with other major stock-markets around the globe. According to many analysts, the equity markets are overpriced while according to some others the growth in the US economy and the corporate earnings justifies even higher market values. As concerns the bonds market, US bonds are under pressure too and as the hedge fund manager Leon Cooperman said: “Investors buying bonds right now are playing with dynamite”.
In this analysis, we are going to evaluate what happens next regarding the Global Markets and especially as concerns the Nasdaq Composite. Whatever is the outcome of this analysis don’t panic if you want to exit the market, you will have your chance to do it the right way.
Cash will be king again, it always becomes king at the end
According to one of our past analysis (some months ago) we have mentioned that the current bullish circle of the global capital markets is coming to an end. This forecast was based on both fundamental and technical analysis. In addition, we said, “Cash will be king again, it always becomes king at the end”. Fortunately for some investors and unfortunately for many others this forecast becomes true.
What Happens Next regarding the US and the Global Equity Markets
In order to evaluate the current market conditions and to be able to forecast what happens next, let’s see first some important facts regarding the US stock-markets:
(a) Basic Reasons why the US Stock Markets should go up (↑)
√ The US economy enjoys stable growth and looks stronger than ever before, since 2008
√ Unemployment is declining and income is rising
√ US corporate earnings are stronger and according to some analysts there are a lot of investment opportunities left in the market (for example Goldman Sachs' analyst David Kostin)
» Check Goldman’s Recent Report on S&P here
√ There is still excessive liquidity in the market driven by the almost zero interest rates