Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Investing lessons from the 1987 Stock Market Crash From Who Beat it - 20th Oct 19
Trade Wars: Facts And Fallacies - 20th Oct 19
The Gold Stocks Correction and What Lays Ahead - 19th Oct 19
Gold during Global Monetary Ease - 19th Oct 19
US Treasury Bonds Pause Near Resistance Before The Next Rally - 18th Oct 19
The Biggest Housing Boom in US History Has Just Begun - 18th Oct 19
British Pound Brexit Chaos GBP Trend Forecast - 18th Oct 19
Stocks Don’t Care About Trump Impeachment - 17th Oct 19
Currencies Show A Shift to Safety And Maturity – What Does It Mean? - 17th Oct 19
Stock Market Future Projected Cycles - 17th Oct 19
Weekly SPX & Gold Price Cycle Report - 17th Oct 19
What Makes United Markets Capital Different From Other Online Brokers? - 17th Oct 19
Stock Market Dow Long-term Trend Analysis - 16th Oct 19
This Is Not a Money Printing Press - 16th Oct 19
Online Casino Operator LeoVegas is Optimistic about the Future - 16th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - Video - 16th Oct 19
$100 Silver Has Come And Gone - 16th Oct 19
Stock Market Roll Over Risk to New highs in S&P 500 - 16th Oct 19
10 Best Trading Schools and Courses for Students - 16th Oct 19
Dow Stock Market Short-term Trend Analysis - 15th Oct 19
The Many Aligning Signals in Gold - 15th Oct 19
Market Action Suggests Downside in Precious Metals - 15th Oct 19
US Major Stock Market Indexes Retest Critical Price Channel Resistance - 15th Oct 19
“Baghad Jerome” Powell Denies the Fed Is Using Financial Crisis Tools - 15th Oct 19
British Pound GBP Trend Analysis - 14th Oct 19
A Guide to Financing Your Next Car - 14th Oct 19
America's Ruling Class - Underestimating Them & Overestimating Us - 14th Oct 19
Stock Market Range Bound - 14th Oct 19
Gold, Silver Bonds - Inflation in the Offing? - 14th Oct 19
East-West Trade War: Never Take a Knife to a Gunfight - 14th Oct 19
Consider Precious Metals for Insurance First, Profit Second... - 14th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - 13th Oct 19
The Most Successful IPOs Have This One Thing in Common - 13th Oct 19
Precious Metals & Stock Market VIX Are Set To Launch Dramatically Higher - 13th Oct 19
Discovery Sport EGR Valve Gasket Problems - Land Rover Dealer Fix - 13th Oct 19
Stock Market US Presidential Cycle - Video - 12th Oct 19
Social Security Is Screwing Millennials - 12th Oct 19
Gold Gifts Traders With Another Rotation Below $1500 - 12th Oct 19
US Dollar Index Trend Analysis - 11th Oct 19
China Golden Week Sales Exceed Expectations - 11th Oct 19
Stock Market Short-term Consolidation Does Not change Secular Bullish Trend - 11th Oct 19
The Allure of Upswings in Silver Mining Stocks - 11th Oct 19
US Housing Market 2018-2019 and 2006-2007: Similarities & Differences - 11th Oct 19
Now Is the Time to Load Up on 5G Stocks - 11th Oct 19
Why the Law Can’t Protect Your Money - 11th Oct 19
Will Miami be the First U.S. Real Estate Bubble to Burst? - 11th Oct 19
How Online Casinos Maximise Profits - 11th Oct 19
3 Tips for Picking Junior Gold Stocks - 10th Oct 19
How Does Inflation Affect Exchange Rates? - 10th Oct 19
This Is the Best Time to Load Up on These 3 Value Stocks - 10th Oct 19
What Makes this Gold Market Rally Different From All Others - 10th Oct 19
Stock Market US Presidential Cycle - 9th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Stock Market Reasons to Be Bullish - At Least For A While!

Stock-Markets / Stock Markets 2012 Nov 24, 2012 - 10:59 AM GMT

By: Sy_Harding

Stock-Markets

After stumbling again in the summer months, the U.S. economy is clearly back on track - if politicians smarten up and prevent it from going over the fiscal cliff.

The recovery is also now being led by the housing industry, which is a particularly good omen. The two main driving forces of the economy have traditionally been the housing and auto industries. That makes sense since when those industries are healthy their good fortune pays forward to their suppliers and peripheral industries like furniture and appliance makers.


The U.S. auto industry began recovering soon after the Great Recession ended in June, 2009, and by many measurements it’s back to its pre-financial meltdown levels.

But until this year the housing industry has had a much rougher time of it; home sales and prices declining further each year, foreclosures and the inventory of unsold homes rising.

The changes this year, and particularly in the last few months, have been dramatic. Existing home sales, new home sales, new construction starts, and home-builder confidence indexes all rising sharply; unsold inventories and the pace of bank foreclosures declining sharply.

Next will come the other side of the widespread destruction of hurricane Sandy in the Northeast - the rebuilding phase.

Not surprising then, the number of new jobs being created each month has been jumping sharply, while the unemployment rate has been falling. Retail sales have been rising, the NFIB Small Business Optimism Index has been rising, consumer confidence indexes have been rising, and inflation remains under control.

Prior to this week, the stock market was concerned about the looming fiscal cliff, with the Dow losing 1,070 points, or 8% over the last two months, and some sectors like utilities and other high-dividend stocks, down 11% to 18%.

But this week the market rallied sharply, the Dow up 3.2% for the week, reflecting mounting confidence that politicians are coming to their senses and will succeed in hammering out a compromise that will either resolve the fiscal cliff threat, or more probably succeed in kicking it down the road to next summer.

So the market has been able to pay more attention to the economic reports.

And it has additional support factors.

The market is now in its favorable season, the winter months, where over the long-term it tends to make most of its gains each year.

There are also signs that corporate managements have become believers again. Corporate insiders, who have been selling heavily, seem to have returned to the buy side. According to Vickers Insider Report, near the market high in September insiders were selling heavily into the market strength, with the insider sell-to-buy ratio just about double its average sell ratio of the last ten years. But last week, for the week ended November 16, insiders had moved sharply to the buy side again, the sell-to buy ratio dropping to less than half its long-term average.

That seems to also tie in with investor sentiment as measured by the weekly poll of its members by the American Association of Individual Investors (AAII), which is considered to be a ‘contrary’ indicator. That is, unlike corporate insiders, who tend to be bearish and selling at rally tops, and bullish and buying at correction bottoms, individual investors tend to have ‘contrary’ sentiment, very bullish at rally tops, and bearish at correction bottoms.

For instance, as the correction from the mid-September top accelerated to the downside, the AAII poll reached a level of 48% bearish on November 11, just over a week ago. That was just days before this week’s rally began. The last time the AAII poll was 48% bearish was on September 22 of last year, just as the big rally of October to May got underway last winter.

Not that the market doesn’t still have a wall of worry to climb.

It was reported this week that the 17-nation euro-zone is now officially back in its next recession. Perhaps more troubling, Germany, the euro-zone’s strongest economy, reported its GDP growth slowed again in the 3rd quarter, to just 0.2%. It’s expected to deteriorate further. James Ashley, economist at RBC Capital Markets in London, says, “The early indications for the 4th quarter suggest that the eurozone recession is likely to continue at least through year-end. And whereas Germany and France provided a partial offset to 3rd quarter overall eurozone weakness, they look set to suffer a fall in the final quarter of the year.”

Also in Europe, the United Kingdom was back in recession this year until its GDP growth came in fractionally positive for the 3rd quarter. But the governor of the Bank of England warns that was due to the one-time economic effect of the Summer Olympics being held in London, and the U.K. economy could be back in negative growth in the 4th quarter.

The U.S. economy can’t offset deteriorating global economies for the long-term, and may run into problems of its own next year. But it looks like a window of opportunity for a typical favorable season rally to next spring, with still enough questions to keep volatility high and investors nervous.  

Sy Harding is president of Asset Management Research Corp., and editor of the free market blog Street Smart Post.

© 2012 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules