Bottoming is a “Process,” not an “Event”

By James Dondero | September 08, 2015

  • US stocks finished the week lower, unable to build on their rally off the Aug 24th lows. Stepping back, while stocks could be quite oversold here, market bottoms are typically a process versus an event, and further bouncing and testing around the August lows would be quite normal.
  • One key to the stock market going forward may be the US Dollar. As Mark Okada, co-founder and CIO, recently explained on CNBC Asia’s The RunDown (watch the video here), an advancing US dollar could help propel markets upwards
  • Naturally, bonds have benefitted from the weakness in stocks, with yields on the 10-yr T-Note briefly slipping below 2%. Should stocks test their August lows, yields would likely do so as well – particularly given the relatively high interest rates in the US, compared to those globally.
  • Finally, emerging markets remain weak. Even India, which has been the stalwart in the space, is now struggling to hold a key area of support. Developed markets, such as Germany and Japan, continue to be far healthier in comparison.

 

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