Earnings Season, USA Debt Ceiling Debate May Cause Market Jitters

Well everyone, we are now heading into what I feel could be some extremely
volatile and turbulent times.
Right now the Dow is sitting at 15,300 odd points but I see a lot of
indicators that could trigger a major fall of 1,000-1,500 points in the
upcoming month or two.
My case for a the correction in equities markets centers on a number of
key financial and economic data announcements that are upcoming and how
they may impact investors emotionally.

• With a debt ceiling showdown and potential government shutdown in the back of investors minds, other additional pressures like earnings numbers for companies will be pivotal to market sentiment going forward.
• Earnings have been a mixed bag so far. The retail sector appears to be very sluggish with Macy's and Walmart both missing second quarter sales estimates and cut forecasts.
• There has been some media reporting back to school sales are also slow which does not signal positive finish to the year.
• Media reports have been backed up in recent times by The Thompson Reuters/University of Michigan's Consumer Sentiment Index dropping to its lowest reading in 5 months.
• Unemployment numbers will be out also in early October. The ADP employment figure will be out on October 2nd with the unemployment number to be published on October 4th.

These statistics need to be broken down as I am feeling the devil will be
in the detail rather than the official number.
With all of these things in play and the Dow Jones Industrial average
trading at approximately 500 points off all time highs I feel there will
be a few nervous investors ready to bail at the first sign of a
significant downward market move.
With the Dow at near record highs and Precious metals well off their
highs, I can make a case for a switch out of the equities back into Gold
and Silver.

When analyzing the market I have been left pondering the following questions.

1. If the unemployment figure is still stubbornly high why is the equities
market up?
2. If GDP numbers are dismal, why is the Dow trading at more than double
what is was approximately 5 years ago?
3. If the retail sector is struggling, many are forecasting a poor earnings
season, why is the stock market just off it's all time highs?
4. If even the Fed conceded it could not taper bond and mortgage backed
securities purchases, sighting it wanted more concrete evidence of
improvement. Why has the stock market remained so strong?

With all of these questions comes a simple answer. People are being forced
into the stock market to get a return. Why?

They have no other option. Bond yields are pitiful, interest rates are at
record lows meaning returns out of term deposits are near zero.

It is for no other reason other than gamble and speculation that people
have been forced into to get a return that has seen the market pump up.
In my opinion the stock market rally is devoid of any solid footing or
economic/ business foundation.
People are in just because they feel the stock market will keep going up.
With all of the economic data before mentioned. The unemployment number,
retail sales, consumer confidence index, sales forecasts cut, it is
difficult to see how this is going to end well for those invested in the
equities market.

Not even the Federal Reserve Chairman Ben Bernanke has confidence in the
market as he refused to take the "training wheels" off the economy by
cutting back on the QE asset purchases.

It is a compelling case to exit the stock market in my opinion. If you do
not act soon I feel it will be like standing on a sand bar just before a
rip tide strikes. One second you have firm footing on the sand, the next
you are being hurtled out to the deep blue sea.

This blog has been started to provide a timeline of projections and
results so that this may be used in the future as a point of reference on
predictions/ projections vs actual results.