Interest rates have risen again and inflation has remained constant. But it doesn’t appear that the economy is strengthening; I say that because rates are still so low. The stock market pulled back in a 2.4% correction. It appears that there may be more to come, so this would be a good time to play it safe. It’s rare to see both stocks and bonds drop in a week, since they usually move opposite each other. My indicators don’t exactly suggest going from stocks to bonds for safety, but stocks are looking much riskier at this point. Traders and short-term investors might be well-served by going to cash.

I’m seeing the same thing in my individual holdings. A number of stocks that had good momentum and had gained 10% or 20% over the past couple months, have suddenly dropped back 20% or 30% (ouch!).

Market Outlook September 22, 2014

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