Mohan:
I think that the market will continue to remain volatile, and that with volatility, prices will inch up/down slowly, not as fast as it went up so far over the last few years.
In general, stock prices are stochastic and so one cannot predict their exact movements, despite convictions oneway or the other. The market corrected from 8200 to 7400 and is now inching up amid volatility, because of the changed mood that SE Asia may not impact the US as much as previously believed. A change in this sentiment (based on actual data on revenues and earnings from SE Asia), expectations on interest rate and corporate earnings growth/decline will alter the drift of the stochastic price process, IMO.
Most of the US exports are capacity generating equipment (that like AMAT ships), and there is a lot of over-capacity around the globe. The apetite for the capacity is fueled by the selling in the US and Europe of products generated from that capacity build up.
In particular, however, as stocks go up, people get more cash to spend on other things, which signals to produce more by building up capacity, raising the stock price further. Thus, stock prices can be stochastic, but there may be an unexpected downward correction if stock price advances have given rise to a substantial increase in consumption (especially in US and Europe) and if the latest correction is insufficient to account for this. It is just my opinion.
Sankar
PS: Thanks for your e-mail. I was busy teaching. |
