The Wall Street is showing signs of a sell-off, but the US stocks might survive for another week relatively unscathed if investors keep betting on sectors less vulnerable to an economic downturn.
There has been a pressure building up for weeks, for a correction in the stock market as the euro and oil prices fell knocking down shares of energy companies and dollar sensitive multinationals. Investors are averting a sell-off by diving into shares of companies that are less vulnerable to the economic cycle.
“There is good reason for a pause, there is good reason to be conservative in here, and there is good reason to raise some cash ahead of a summer correction and a better buying opportunity,” said Richard Ross, global technical strategist with Auerbach Grayson in New York.
The strategy could hold the market afloat for a little longer but the end of the Federal Reserve?s easy money policies is just around the corner. Investors are becoming more sensitive to risk in general. The sharp sell off in commodities markets, this month, was considered as the first warning sign of an upcoming market correction.