When planning for retirement, a key facet is the actual savings and earnings of you accounts. If you are not in a safe environment, Investment News has described 5 signs of a market correction that you should be aware of. Here are a few snippets of each
1. A lot of overextended buyers in U.S. stock market. There is a shortage of buyers in Apple stock, which is down 40% from its high. In fact, there is a very large position of short sellers. It’s hard to imagine because Apple stock is the number one capitalized company in America.
2. Market breadth is weak and market indices have been hitting new highs, but sectors including energy, materials, transportation, retail and technology remain behind. These signals are not good. Even the Russell 2000 failed to rally, but broke down below the November trend line and the one-month trading range.
3. Weak corporate earnings. Traditionally, a surging stock market is propelled by strong corporate earnings growth, but that is not the case today. Actual S&P500 operating earnings have declined 9% since the second quarter of 2012 peak. In the past 3 months, 117 companies have warned about Q1 earnings guidance shortfalls versus only 24 companies issuing positive guidance. That’s a negative 3.0% update for every one that is positive.
4. U.S. consumer spending numbers are weak. Supposedly strong consumer spending numbers reported by the U.S. government totally contradict what the private sector surveys and companies are reporting. U.S. government reported consumer spending increased by 70 basis points last month according to the Commerce Department. They have been exaggerating because Wal-Mart and McDonalds are reporting negative sales for the same time period.
5. Jobs are non-existent although the U.S. government says the jobless rate fell from 7.7% to 7.6%. The sad truth is that nearly 500,000 Americans have dropped out of the labor force. We now have the smallest amount of people in the workforce in a generation.