Hello traders and MarketClub members everywhere! Just this morning I was thinking of an essay I had read many, many years ago. The intriguing feature to me was the headline which read, "They Do Ring A Bell At The Top Of The Market."
Well, I have to say it was an intriguing headline which got me to read the article, perhaps like you're reading this post now. The essence of the article was when interest rates go up, they usually signal a top in the market. As we all know, we have had unusually low interest rates for a prolonged length of time with one QE after another. All of which has boosted the stock market, but I believe the jury is still out on the economy.
With the end of quantitative easing, it's only going to be a matter of time before the Fed begins to raise interest rates. So the question is, how is that going to affect the markets? On one side of the coin, you can argue that it is only going to be good for people that have fixed incomes and rely on bonds and interest-bearing instruments. On the other side of the coin, will investors be willing to risk hanging in the market if they can get a return elsewhere with little or no risk? [Read more...]