According to Mitchell Clark, contributor to the popular financial newsletter and web site, Profit Confidential, the S&P 500 Index is currently trading around the same level it was back in April of 1999, highlighting the extreme volatility the stock market’s experienced since then. On balance, Clark believes the stock market today is fairly valued considering earnings, but he can’t get bullish on the stock market at this time.

In the recent article S&P 500 Trading at April 1999 Level—What this Means for the Investor, Clark outlines why he’s cautious.

“The market’s been due for a pullback,” says Clark. “Going forward, the trading direction will obviously be based on corporate earnings, which I estimate will be uneven, but generally positive.”

A key indicator for Clark is the Dow Jones Transportation Index, which broke down significantly over the last few days.

“This index, which was holding up very well, has now given up all of its gains produced since the beginning of the year and I’d like to see it turn around soon,” says Clark. “Any further breakdown below 4,850 on this index would definitely be bearish.”

Clark believes that what the stock market needs in order to advance materially is outperformance in the earnings department.
The Profit Confidential analyst wonders if the old adage “Sell in May and go away” will apply once again.

Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market...before it plunged.

Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.

To see the full article and to learn more about Profit Confidential, visit www.profitconfidential.com.

Profit Confidential is Lombardi Publishing Corporation’s free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit www.profitconfidential.com.

Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi’s current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.