It was not a good week for the bulls on Wall Street. The market fell quite a bit yet again, and this led to worries that it might be headed for a major drop sooner rather than later. Already the market finds itself in correction territory, but Monday’s trading action saw the S&P 500 index break down through its two-hundred day moving average. This is typically a sign that more drops are coming says CNBC.
While a fall may indeed be in the cards, there are some who say that the short term movements in the market could actually be a bit more positive. Earnings season is coming up as far as the first quarter of 2018 is concerned. It is expected that a number of companies are going to report solid earnings numbers. If they do, then there could be a nice rebound in the market on enthusiasm about that news. However, one has to wonder if some of that is already baked into the numbers. If investors already expect a good earnings number, then isn’t it likely already playing a role in how the market is trading?
Consumer discretionary and technology stocks have been taking it on the nose the hardest lately. They were the types of stocks that soared the highest while the bull market was on, so it is reasonable to assume that they would have the biggest length to fall as this correction starts to take hold. Holders of those stocks are not happy with the pricing action that they have seen in their beloved companies as of late.
Some experts have said that the market downturn is more US-centric than normal. They suggest that this is a US based problem that might have to do with the politics in Washington D.C. at the moment as well as issues with technology companies in general.
The market has not exactly been in this condition since the Summer of 2016 when the British voted to leave the European Union in June of that year. That was a time when the market also fell quite a bit. If history is repeating itself here, then we really could be in some trouble. That being said, we are not yet to that point, and everyone needs to take this one step at a time. It is perhaps best to stay out of the market at this point to wait to see what will happen next.