Friday, 19 February 2016

US stocks end rally, bottom "not close"

The US stock market ended its three-day rally on Thursday with the S&P 500 falling 0.5 percent.

Elsewhere, the Nikkei 225 jumped 2.3 percent, the Shanghai Composite Index fell 0.2 percent and the STOXX Europe 600 was unchanged.

Jim Stack, president of Stack Financial Management and InvesTech Research, thinks that stocks are in a bear market and that the recent rally was not sustainable.

Last Friday, in his InvesTech newsletter, he wrote: “Judging by the depth, duration, and broadening sector contribution to the ‘distribution’ in leadership, we must conclude that Wall Street is currently in a bear market.”

He added that bear markets can create deceiving rallies like the recent one that could convince investors that a bottom is being made, but he thinks “we’re not close to that yet”.

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