Where Is This Market Heading?

I hate making predictions. They are so irrelevant when it comes to making money. The one thing that I don't think enough people understand is that the best traders and investors don't particularly care what certain stocks are doing. They invest in certain stocks and sectors because they believe in the fundamentals that will eventually win out. Short-term price movements are irrelevant. Most of us are trying to make money in 5-10 year windows. So, invest in funds and stocks for fundamental reasons. If the price of that particular security goes down, and the fundamental reasons you like it remain unchanged, buy some more. Stay unemotional. That is exactly why I hate predictions. If your prediction doesn't come true, one will often assume that they were wrong and reverse their stance, only to get slammed soon after. Try to avoid predictions and stick with fundamentals. That being said, I'm going to make a prediction!!

Ok. I'm not really going to make a prediction--more like an observation. This is a HUGE week for the market. My overall feeling is that this market is relatively close to a big pull back. We have serious problems in Europe, rising inflation, rising taxes, and major global concerns. The other issue that I see out there is simply that I do not believe our economy is going to enable companies to continue their current earnings' growth. Companies have been relying on modest growth and major cost cutting to hit their earnings' projections. There just isn't that much cost cutting left to do. Consumers make up 65% of our economy. Continuing real estate weakness and inflation will continue to tax the average consumer thus decreasing their purchasing power. Anyway, I don't think we are looking at a total collapse, just a long period of sharp ups and downs. Never hesitate to take profits or buy the dips.

Continue to keep an eye on oil. It did breach $100 but with very little conviction. It appears to me that it will pull back a little here but then move back up and hover around these levels. This week will tell us a lot about where this market is heading in general. But, like I said, do not get too confident if it does indeed move in a positive direction. There are clouds on the horizon and everyone needs to move forward with extreme caution.