It's been the summer of ‘Fancy,’ as captured by Iggy Azalea’s catchy pop tune, but for the stock market it has been anything but - more like pedestrian if you ask most market watchers. Another day of grinding lower yesterday has Joe Fahmy of Zor Capital thinking he’s seen this story before.
“I think the market’s had a similar pattern for the past two years, where we tend to grind up in a liquidity driven, low volatility environment and it just grinds and grinds slowly,” he says in the attached video. “Then when sentiment gets too bullish, we see these swift corrections sometimes a few days, a week or so, especially in the small caps, and then the sentiment completely shifts from too bullish to too bearish very quickly.”
The end of last week and a slight down day yesterday could mean the market is stuck in one these swift corrections as Fahmy noted above. Eventually the selling stabilizes, then stocks grind higher once again.
The big question for many investors is how swift, or long-lasting this correction will be. Any hints of the Fed looking to raise rates, or a rise in geopolitical tensions could throw this pattern out of whack.
That being said, Fahmy sees modest gains for stocks going forward with the S&P 500 (^GSPC) hitting 2,000 by year end.
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