This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Market Preview: That Sinking Feeling

Stocks in this article: SWY RT SPY ^GSPC ^IXIC ^DJI

NEW YORK ( TheStreet) -- And just like that, stocks are right back where they were before Ben Bernanke and the Federal Reserve rode to the rescue with QE3 less than a month ago.

It's seem the central bank's generosity is inspiring investors to take profits rather than risks.

The rationale is pretty easy to understand. All three major equity indices began the day up more than 10% in 2012, not a bad year by any stretch, especially when you consider the S&P 500 was basically flat in 2011 and the Nasdaq finished nearly 2% lower.

At their peaks in late September, taking some money off the table had to be tempting, especially with what even then promised to be a dismal third-quarter earnings season looming and the uncertainty of the presidential election and fiscal cliff waiting to complicate the end of the year.

After all, if you're not going to cash in at multi-year highs, when the Fed has already promised to pull out all stops (meaning there's no more rabbits to pull out of the hat), when are you going to cash in?

This week's mutual fund flow data from the Investment Company Institute showed plenty of folks came to a similar conclusion as investors yanked a whopping $10.6 billion out of long-term funds investing in U.S. equities. The outflows are nothing new but that figure is still striking, totaling more than the previous two weeks combined and more than half of the $18.5 billion in total outflows for September.

Sam Stovall, chief equity strategist at S&P Capital IQ, is still positive about stocks for the remainder of the year and he chalked the sharp drop of late up to nervousness about just how bad earnings season will be.

"Investors have recently adopted a 'wait and flee' attitude toward equities ahead of the Q3 EPS reporting period, which intensifies next week," he said in emailed commentary late Wednesday. "Despite a lessening of the projected y/y decline in Q3 S&P 500 results, according to Capital IQ consensus earnings estimates, share prices have fallen as Wall Street waits for, among other things: 1) Spanish elections and a possible subsequent request for financial aid, 2) U.S. managements' guidance and the possibility that Q3 represents a trough in the EPS slowdown, 3) the U.S. presidential election, which has heated up since the recent debate, and 4) the likelihood of a pre-2013 resolution to the fiscal cliff. We continue to believe equity prices will advance into year-end as successive issues are resolved."

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs