The Market is Signaling Better Times Ahead
It is my informed opinion that we are witnessing a historical reversal in domestic US equity markets. While I tend to swing trade, my system at the badge below had it’s best week ever. Not that the news had anything to do with it, but that we appear due for a rebound.
We have come off our lows of 666.79 on the SPX cash index to 842.5. At one point we were down approximately 26.158%, and have rallied significantly back to only being down 6.7%. I believe that we have another 20% of upside from here before the end of the year. I have a feeling that the market is signaling that the Obama administration’s plan, while having its’ flaws, is enough to do the job of getting the economy back on track.
While we certainly have headwinds, the market in its rally from the lows despite horribles jobs numbers that I have posted in the past seems to be shrugging off the bad news. I think it is presently discounting future good news. The largest catalyst I can see is being felt through all of the increased government expenditures throughout the world. The G20 meeting appears to have come to a conclusion that economic stimulus is necessary to promote and re-start our business cycles.
It is my opinion we are in an early stage recovery phase, and while I do expect GDP to be negative this quarter, I think the worst of what we’ve seen is over. Note that despite the economic numbers being horrible, we are still rallying, and this is suggestive of early signs of recovery.