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Fear of the Unknown

Stocks had their biggest one day sell off of the year and now we find ourselves under 1600 once again. This has many investors scratching their head as to what changed the mood so much, so fast?


Investors crave clarity. And when that eludes them, they typically assume the worst.

Yes, there is greater clarity that the Fed is gearing up to remove QE. The problem is; What does the economy and investment landscape look like in the post QE world???

Those throwing their stocks overboard are concerned that it will mean slower economic growth which is not particularly appealing for corporate earnings and share prices. Yet there are many academics who point out that all the extra QE did not really create any economic benefit. So its removal should not be a feared event for future growth.

Further, with bond rates likely rising a notch or two more, it will lead to ample losses in bond funds. Not all that money will flow to cash. So stocks will continue to be an attractive destination for those seeking a positive rate of return.

Unfortunately, the sailing has been too smooth and easy up to this point. The Market Gods demand payment for that now in the form of a correction to test our fortitude. Technicians have pointed out 93 different levels of support that we could fall to (meaning they have no clue).

Likely somewhere between here and 1500 the correction will end. In that time those seeking clarity will become more settled that the economy rolls on and that stocks are still the most attractive investment alternative. Until that time it pays to be more defensive.

Other Featured Commentaries:

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•  Zacks #1 Ranked Healthcare Mutual Funds


Steve Reitmeister (aka Reity...pronounced "Righty")

Executive Vice President

Zacks Investment Research

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9 Stocks the Institutions Are Hiding

Big funds and pension plans try hard to keep others from spotting their key moves too soon. They need time to go all in, drive up the prices, and make big profits in any market condition.

Until now, you could only catch the first hints of their moves if you had the time, will, and expertise to comb through obscure SEC filings. Starting today, you can get in early and easily on the best of these "smart money stocks" - and also see buys and sells from all of Zacks other services - for the total sum of $1.

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Bull & Bear of the Day

Zacks Rank #1 Strong Buy

SodaStream International (SODA)

This growth story continues to bubble over thanks to new deals and strong consumer demand in the American market.


Zacks Rank #5 Strong Sell

Statoil ASA (STO)

This Norwegian oil stock may be stuck in a fjord given its poor outlook for growth in the near term.

Stock Picking Strategies

Your Next Stock Should Be Making New Highs  ››

Maps & Plans: Build, Then Follow  ››

FED Front and Center Again  ››

Funds Commentary

Top 5 Highest Yielding Zacks #1 Ranked International Bond Mutual Funds  ››

Precious Metal ETFs Crumble in Fed Meeting Aftermath  ››

The Comprehensive Guide to Telecom ETFs  ››

Options Strategies

5 Careful Ways to Win with Options  ››

Video Reports

This Week's Aggressive Growth Stocks (OME)(ORBK)

Aggressive Growth Stock picks discussed with Brian Bolan, Omega Protein (OME) and Orbotech (ORBK).

Trading Maps & Plans: Build, Then Follow

Why having a method with weighted odds can keep you profitable and sane.

Roundtable Top Picks for the Week of Jun. 17th

Ideas for Auto Parts, Consumer Finance and Share Repurchases. Opportunities covered include Standard Motor Company (SMP), Discover Financial (DFS) and PowerShares Buyback Achievers (PKW).


What's Today's Top Rated Mutual Fund?

Use the Zacks Mutual Fund Rank, a quantitative ratings system designed to help you find the best funds to beat the market. See which ones to buy, which to sell and track your favorite mutual fund family.

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