The Stock Market has Its’ Best Quarter in 17 Years
Oct 1, 2009
Posted by Jody Eisenman | Filed under Uncategorized
Although we sold off near the end of September, US stocks posted gains in excess of 15% for the quarter. The Dow and the S and P are up roughly 50% since the March lows. Although many so called experts have doubted US stocks are calling for a retracement, the market continues to surge higher almost every month. The overall depth of this rally has been nothing short of amazing. Since the March lows, the Dow is up over 3000 points. During this entire time, the largest pullback we have had has been only 600 points between mid June and mid July. Every sell off has been met with a wave of fresh buying. Today’s action was indicative. After an early morning sell off of over 150 points, we actually rallied to get in the positive zone by the afternoon, before finally settling for a modest 30 point loss. As I have stated previously, I believe the strength in the credit markets have been the primary push to stocks. Looking at the equity and debt markets today, it seems hard to believe that we actually were in a severe bear market in 2008 and even early 2009. Investors who wouldn’t buy any bonds that weren’t FDIC insured or US treasuries are falling over themselves to grab bonds at an almost unprecedented rate. This has lead to a tremendous stock rally as well. While a pullback could come at any time, I continue to believe that as long as the bond markets remain strong, equities should follow suit.
Many people have asked me where I think the top is. I think it is very difficult to call, as I believe that the vast majority of time, the markets tend to be either overbought or oversold. The same way it was almost impossible for anyone to call the bottom in March, I think it is foolhardy to try and call the top here. As always, I think using stop losses could be prudent.
