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Saturday, July 21, 2012

The Week Ahead: Even Good Earnings Can't Stop a Correction

English: Phillippine stock market board
English: Phillippine stock market board (Photo credit: Wikipedia)
Stocks still look more attractive than bonds on a long-term basis, except perhaps not this week, as a correction may be in store. However, certain sectors remained strong through Friday's drop. MoneyShow's Tom Aspray  points out which ones still look good for cautious investors.
The US stock market got a boost this week from better than expected earnings, especially out of the technology sector. Still, most investors are not yet convinced.
The Investment Company Institute estimates that $540 million moved out of stock funds in the week ending July 11. This was better than the prior week, when the outflow was $2.87 billion.
Bonds continue to be the big winner, as they had net inflows of $6.39 billion, with the majority in taxable bonds. The prevailing concern of investors is still on the return of their capital, not the return on capital.
The chart of the iShares Barclay 20+ Year Treasury Bond ETF (TLT) shows that it made a marginal new high on July 13, and still is in a solid uptrend. TLT was strong Friday even as the stock market corrected after several days on the upside.... Continue to read.
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