The market has been stuck in a fairly tight sideways pattern over the last couple of months, as Wall Street continues to consider the impact of a possible interest rate increase, and volatile oil prices on the overall economy.
I expect to see much of the same moving forward, and there is also the impact of the upcoming presidential election to keep in mind. The market has been reacting to moves in the election polls, and that is likely to continue as Trump and Clinton fight it out over the next month. The market tends to react positively when Clinton extends her lead, while pulling back on Trump strength.
Right now Clinton is the clear favorite following the leaked tape of a Trump engaging in a lewd conversation regarding women, but if Trump has proven anything, it is that you can never count him out, and I expect he will fight harder than ever as the election nears.
The Federal Reserve is going to be the real driver of the market in the next few months. The Fed is expected to lift interest rates for just the second time since the financial crisis at some point this year, followed by more increases next year as long as the economy does not start to flash major warning signals.
If and when interest rates rise, the market is likely to run into a little selling pressure, as money flows out of stocks and into more traditional fixed-income assets, but rates will remain low enough that I do not expect to see a major market correction on just one or two increases.
If we do see a little sell off after the Federal Reserve decides to lift rates, I would view that sell off as more of a buying opportunity than a reason to get out of the market, but there are some stocks that I would avoid buying at this time, and would consider selling if they were in my portfolio.
The following stocks are all flashing major sell signals, and I would suggest taking a closer look at each stock if you have positions at this time.