All about the Bear Market Trap!

By: Profit Confidential

Mainstream media makes great headlines to inform everyone about the S&P 500ís impressive run. It is now just seven percent away from its all time high mark, which is indeed very much commendable for the first quarter of 2012. Since many years, historically; the retail investor has been participating last in the bear stock market rally trap, before Phase three of a bear market takes a hold and drives the stocks lower. So, I consider this as a warning for my dear readers.

The retail investors saw a major downfall in the stock market in 2008 and they were severely burned in that year, which one of the prime reasons of people is backing off to step again in the stock market rally and the S&P 500. In general scenario, S&P 500 continues to rise every time, so the retail investors believe that his or her investment wonít go in vain. So, the stock market or the S&P 500 completely and successfully grabs the attention as an investment opportunity. As Iíve been highlighting in my write ups about the economic reports and the twists and turns involved in the same, these all reports arenít as rosy as they look.

There is no materialism in the housing sector recovery yet. An average Americanís real disposable income has not yet appreciated, as the matter of fact; the real disposable income is falling over the years. It in turn means that up to 70% of the U.S economy American citizens and consumers have not been able to spend. The employment graph and the number of jobs are somewhat stronger, but there are most of those jobs which are recently created and they pay considerably low. But in the contradicting state, the age group of active partisans in the employment industry is many. For numbers, people in the age group of 16-64 are actively engaged in working somewhere or the other. But there are other people who are not working anywhere. And they have also given up on searching for jobs.

Added to these stories, there are some other pondering issues like the gas prices are going inflexibly high and the U.S manufacturing units are still pretty weak. It makes harder to build a case for the S&P 500 to let it continue rise higher.

These stories are having a larger impact over other countries like Europe, China and many other parts of Asia. So, the global economy is on the downfall as well. Hopes are that this downfall will be seen accelerating in the fiscal year 12-13; which will act as another hurdle for the S&P 500 and the stock market rally to take pace to reach higher records.

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