While forecasting stock market movements and its short term patterns, I've looked a model consisting of many components and indicators. Here's a brief overview of stock market where four of my five basic categories stand now:
- The fundamental valuation of the stock market is very high.
- The macro-economic or business cycle-threatens to turn down again.
- Liquidity indicators for the G7 countries have deteriorated sufficiently during the past 12 months to rate them as a clear negative for the stock market.
- The overall technical picture shows some signs of a possible stock market top. But all in all it's more or less neutral.
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