Market Watch: Why Wall St. may have moved into the “danger zone”

By
Phil Cannella
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It was a relatively flat day on Wall Street, with small gains as markets struggled to gain any momentum following release of the July Fed minutes. General consensus from voting policymakers is that that more data is needed before another Fed rate hike is considered. Read the July Fed minutes here.  Cisco did announce plans to cut 5,500 jobs, or 7% of global workforce starting next fiscal year. Meantime, The Investors Intelligence survey, which measures the economic & investment attitudes of over 100 editors of global investor newsletters  shows over 56% of them are optimistic about the stock market. However, that investor confidence and positiveness may be a warning sign that markets are over-inflated.

John Gray, co-editor of the Investors Intelligence newsletter says:

“The current attitude level is considered the danger level and the market is poised to head the other way in the near term. Early July saw the bulls exceed 50 percent and we said it might take the Nasdaq comp joining other ongoing index highs to achieve the capitulation to boost the reading to into the top region. The bulls could still advance further to equal those 2015 peak levels.”

Dan Suzuki, Senior U.S. Equity Strategist for Bank of America-Merrill Lynch told CNBC’s “Markets Now” that there has been a change in leadership on Wall Street and the fundamentals of the market are not very good when compared to valuations.  Watch more below.

Here are the final numbers from Wednesday, August 17th, 2016 on Wall Street:

Dow Jones Industrial Average: 18,573.94  (+21.92 / +0.12%)

NASDAQ: 5,228.66 (+1.55 / +0.03%)

S&P 500: 2,182.22  (+4.07/ +0.19%)

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