Tags: Citi | Levkovich | Stocks | indicators

Citi’s Levkovich: Stocks Set to Drop as Indicators Won't Stay Rosy for Long

Wednesday, 21 March 2012 07:16 AM

Stocks are on the rise but that could change, as the market hasn't faced any bad news to test its resolve, while warmer weather is propping up economic indicators but in a temporary fashion that could end soon, says Citigroup Strategist Tobias Levkovich.

Recent declines in the Citigroup Economic Surprise Index suggest economic indicators might not surprise on the upside such as unemployment rates have done lately, Levkovich tells the Wall Street Journal.

The index is a weighted average that illustrates gaps between economic data and the consensus expectations beforehand.

Editor's Note: Wall Street Whistleblower Warns of Meltdown, See His Uncensored Interview

Unseasonably warm weather this winter has also boosted indicators by bringing construction projects online ahead of schedule, which is good for employment, although overall demand for construction isn't changing, just the timing is.

"Investors have yet to witness any clear negative numbers to generate new concerns," Levkovich says, adding "it is fair to suspect some of these issues will show up in coming months," the Journal reports.

"The preponderance of the evidence still argues for a market pullback."

High gasoline prices may weigh down consumer demand figures as well.

The Dow Jones Industrial Average is trading above 13,100 while the broader S&P 500 index is above 1,400, both impressive figures, according to market observers.

"We are seeing this unbelievable rally in the market and yet the market is unbelievably complacent. We haven't been this bullish for a long time," says Randy Frederick, director of trading and derivatives at the Schwab Center for Financial Research, based in Austin, Texas, according to Reuters.

Editor's Note: Wall Street Whistleblower Warns of Meltdown, See His Uncensored Interview

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