U.S. stock market looks for brake after steep run

After a near six-month ascent, the U.S. stock market is more than likely headed for a pause as investors waited for signals to continue a rally that many now view as overdone in light of the still-shaky economy.

“We’ve had a great run here, but here’s five reasons to be concerned going into the fall,” said Art Hogan, chief market strategist, Jefferies & Co.:

• September is historically the worst month of the year.

• The market has had a significant run up from its March 9 lows, up about 50%. “On valuation alone we may be getting ahead of ourselves,” said Hogan.

• Insider selling. “The significant increase in insider selling activity suggests that in the eyes of corporate management valuations are becoming stretched at current levels,” the analyst said.

• Short interest is winding down. “The lack of meaningful short positions for the most economically sensitive sectors eliminates a source of market support that was significant during the most recent rally,” said Hogan.

• The consumer in general. “Unemployment is rising, the value of consumers’ home continues to be languishing, and the consumer seems to have become a saver. The de-leveraging of the U.S. consumer is going to be a long process,” said Hogan.

Source/Full Story: MarketWatch

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