By: Todd Wheatley
(c) IQ-2k   07-27-15

In my last article on the stock market, "Boom, Boom, Kaboom", I advised you to sell while the selling was good. Turns out to have been good advice. Since that time broad fluctuations created a flat market until a week ago. Now a solid downturn has emerged sending the DOW Jones Industrial Average well into negative territory for the year.

Still with the Greek debt crisis resolved and the Iranian nuclear accord completed the stock market should have been set to rebound. Add to that unemployment claims have dropped to levels not seen since 1973! Moreover the U.S. has a strong real estate market and satisfactory levels of consumer spending. All of these things point to solid economic fundamentals and cooling global hotspots.

So what gives?

News outlets are reporting that broader earnings questions have weighed on investors. Though I would counter with a market run up that needed correction. Well, whatever the reasons, a market correction has occurred (see my posts DOW-gold-oil) and created an opportunity to buy. But when?

To answer that question we must go back to global concerns, namely the Chinese. Their stock market dropped 8.5% overnight (07-26-15). In response other stock markets around the globe also lost ground (see my newest addition ... DAX/...).

While this bears watching the massive involvement of the Chinese government in stock market valuations create broad uncertainty. Yet given the huge losses in the Chinese stock market since June you should watch the overheated Chinese real estate market. A crash here could trigger huge losses in Chinese employment and a major disruption in the world economy.

While I do not anticipate a widespread financial collapse there remains cause for concern as I wrote in my "Apocalypse Clock" assessment. So buy now if you can stomach the risk, otherwise wait until Fall for a potential Christmas rally.


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