THE STOCK MARKET HAS CERTAINLY GIVEN everyone plenty
to talk and worry about in recent weeks. From a record high to an important
breakdown, the Dow Jones Industrial Average has made "volatility" part
of everyday investing vernacular.
So, even with the index on the cusp of a new leg down, it should not
be too outrageous to say that there is going to be a decent rally sometime
soon. The question is whether it is coming from current levels or from
another 5% below. In either case, it might be the last chance for investors
to switch from playing offense to playing defense.
On the bullish side, liquidity is still out there. Yes, it has shrunk
quite a bit due to lenders pulling back from the subprime mortgage mess.
The more important driver — the yen carry trade, where investors borrow
at low rates in Japan and invest elsewhere at higher rates — is also
unwinding a bit thanks to a rally in the yen itself. A strong yen can
negate profits made overseas when investors need to convert them back
into that currency to pay back their loans.
See the full article here:
http://online.barrons.com/article_email/SB118591826514983850-lMyQjAxMDE3ODA1MTkwMTE4Wj.html
