On Monday, I talked with David Asman at Fox Business about reasons the stock market is overdue for some consolidation after a big rally in 2012 and to start the year.
This spot was derived from a longer column I wrote last week about 7 signs that the market decline will continue. At the time, I was quick to point out that the cause of the market malaise wasn’t the much-talked-about Fed minutes hinting at tighter policy, but rather systemic troubles with the rally based on sentiment and valuations for the stock market as a whole.
Interestingly, on Monday the markets tanked thanks to trouble in Italy — but as I told David and as I wrote this morning in a separate post, this was just a convenient excuse. The reality is that a pullback was overdue and many bulls were actually wishing for consolidation because they wanted to make buys but couldn’t justify doing so at early February levels.
Anyway, take a look. I remain convinced the markets are driven by sentiment right now and that the troubles in the Europe and stagnant U.S. growth have been baked in. What we need is a catalyst to move higher… and without it, we are drifting down and sideways until we can find another leg to this recovery rally.
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.