InTheMoneyStocks'  Instablog

Send Message
  • Why The Market May Go Higher: Simple Bubble Reason Revealed 0 comments
    Apr 25, 2013 12:40 PM | about stocks: SPY

    The markets are trading near their all time highs and very likely will continue higher. Today, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is trading at $158.85, +0.95 (0.60%). The all time high reached a few weeks ago was $159.71. While the markets will go higher, it is important to recognize a growing bubble in equities.

    Right now, the S&P 500 P/E sits at around 15. This is high historically but not outlandish. While earnings this quarter have generally beat expectations, almost all big companies like International Business Machines Corp. (NYSE:IBM) and 3M Co (NYSE:MMM) have missed on revenue. This tells us that growth is slowing but cost cutting is helping earnings per share beat expectations.

    So with growth slowing, how can the market keep going higher? The Federal Reserve has manipulated the yield curve so that there is nowhere else to go for any return on your money. With interest rates stuck at obscene low levels, investors feel they have no other choice than to put money into the stock market.

    Is this a good reason to invest? Absolutely not. This is how bubbles are created and this is no different. If the markets break higher we could see another thousand points or more added to the Dow Jones Industrial Average before an epic collapse is signaled. Bubbles in history last a while, getting every average person into the market before the collapse. However, the risk of collapse is lurking each day should the right catalyst hit.

    Gareth Soloway<
    (click to enlarge)

    Stocks: SPY
Back To InTheMoneyStocks' Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


  • And he just closed out another one, $DUST for +7.55% in the Research Center...
    Jul 20, 2016
  • Gareth sold his $JDST in the Research Center here: Profit earned = +12.5%. Congrats members!
    Jul 20, 2016
  • $IWM negative already on the day. Small cap warning signal?
    Jul 20, 2016
More »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.