Go figure this balmy stock market. A week ago, investors were beaming. No wonder. It looked like we were seeing a replay of last July’s running of the bulls of Pamplona as bullish sentiment in the stock market continued to rise, while fear showed additional signs of evaporation.
The spreading bullish fever is easy to understand, given the market’s blistering performance — up nearly 70% since its low of last March (about 6,500 on the Dow) — a nine-month rise that has been devoid of any meaningful interruption along the way.
But suddenly, an unexpected kick in the groin, as the major averages got slammed in last week’s final three trading sessions, highlighted by a wicked 552-point drop in the Dow.
Money manager Arnold Silver of Los Angeles-based A. Silver Associates considers the drop ominous. He views it as a case of reality catching up with wishful thinking, a recognition of growing turmoil in Washington, a President in hot water, and he sees lower equity prices ahead, maybe another 5% to 7% decline.
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