It has been another rough week for the stock market. The Spyder Trust (SPY) lost 1.3% for the week, after it managed to close Friday well off the lows.
The worst-hit sector has been technology, as the Apple-heavy Select Sector SPDR Technology (XLK) is down well over 13%. Though the majority of world markets are also lower, the German Dax is down just 6.4% from its September high.
This week does not appear to be any less volatile. Tensions in Gaza are high, Greece’s euro debt problems have not yet been resolved, and we have the ongoing discussions in the US over the fiscal cliff. So which of these three clouds on the horizon worries me the most?
The potential for another war in Gaza and the chance that it could spread is my biggest worry. It could cause a deep shock to the financial markets, if not the global economy. Unfortunately, neither side is big on compromise, which is the same problem facing the US and the Eurozone.
Despite the rally Friday, the market could still see another sharp break to the downside before we get a strong oversold rally. From a technical perspective, we need to see more than a one- or two-day rally to bring us closer to the formation of a market bottom.
As for the fiscal cliff, I still think that those who sold in fear over its consequences will regret it. I expect many stocks to surpass their pre-election levels in the coming months.
 |
| READ THE ORIGINAL POST AT www.forbes.com |