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Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives

SPY 681.44

+1.6%

Nov 10 4:00 PM EST

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To: Mevis who wrote (68196)	1/31/2015 10:01:30 PM
From: GROUND ZERO™	Read Replies (1) of 218675

Here are some more reasons why this market is now vulnerable... Friday’s report that the economy grew only 2.6% in last year’s fourth quarter was disappointing, not least because it would have been worse without the fillip for consumers from falling oil prices. Economists were hoping for the growth momentum from the previous two quarters to kick the economy onto a higher plane above 3%, but instead growth slipped back closer to this subpar recovery’s norm. The composition of fourth-quarter growth is also cause for some concern. The more troubling story is nonresidential investment, which contributed a paltry 0.24 points to GDP. Business investment grew at a feeble 1.9%, with notable declines in industrial and transportation equipment. This is almost certainly the fallout from the flip side of lower oil prices, which is the blow to U.S. energy production. This is likely to continue for some time as the shale industry adjusts, and don’t be surprised if you start reading about the failures of energy companies that took on too much debt during the boom. The shame in the fourth quarter is that other business spending wasn’t enough to compensate for the declines in energy. This also fits the pattern of this not-so-great expansion, and it will take time for lower energy prices to assist other parts of the economy. The fourth quarter report means that growth for all of 2014 clocked in at 2.4%, which is the best since 2.5% in 2010. It also means another year, an astonishing ninth in a row, in which the economy did not grow by 3%. wsj.com GZ

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