Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Who is Spreading the Virus? UK Coronavirus 2nd Wave Analysis - 30th Sep 20
Gold And Silver Follow Up & Future Predictions For 2020 & 2021 – Part II - 30th Sep 20
The Only Thing Systematic Is The Destruction Of America - 29th Sep 20
Fractional-Reserve Banking Is The Elephant In The Room - 29th Sep 20
Gold And Silver Follow Up & Future Predictions For 2020 & 2021 – Part I - 29th Sep 20
Stock Market Short-term Reversal - 29th Sep 20
How Trump co-opted the religious right and stacked the courts with conservatives - 29th Sep 20
Which RTX 3080 GPU to BUY and AVOID! Nvidia, Asus, MSI , Palit, Gigabyte, Zotac, MLCC vs POSCAPS - 29th Sep 20
Gold, Silver & HUI Stocks Big Pictures - 28th Sep 20
It’s Time to Dump Argentina’s Peso - 28th Sep 20
Gold Stocks Seasonal Plunge - 28th Sep 20
Why Did Precious Metals Get Clobbered Last Week? - 28th Sep 20
Is The Stock Market Dow Transportation Index Setting up a Topping Pattern? - 28th Sep 20
Gold Price Setting Up Just Like Before COVID-19 Breakdown – Get Ready! - 27th Sep 20
UK Coronavirus 2nd Wave SuperMarkets Panic Buying 2.0 Toilet Paper , Hand Sanitisers, Wipes... - 27th Sep 20
Gold, Dollar and Rates: A Correlated Story - 27th Sep 20
WARNING RTX 3080 AIB FLAWED Card's, Cheap Capacitor Arrays Prone to Failing Under Load! - 27th Sep 20
Boris Johnson Hits Coronavirus Panic Button Again, UK Accelerting Covid-19 Second Wave - 25th Sep 20
Precious Metals Trading Range Doing It’s Job to Confound Bulls and Bears Alike - 25th Sep 20
Gold and Silver Are Still Locked and Loaded… Don't be Out of Ammo - 25th Sep 20
Throwing the golden baby out with the covid bath water - Gold Wins - 25th Sep 20
A Look at the Perilous Psychology of Financial Market Bubbles - 25th Sep 20
Corona Strikes Back In Europe. Will It Boost Gold? - 25th Sep 20
How to Boost the Value of Your Home - 25th Sep 20
Key Time For Stock Markets: Bears Step Up or V-Shaped Bounce - 24th Sep 20
Five ways to recover the day after a good workout - 24th Sep 20
Global Stock Markets Break Hard To The Downside – Watch Support Levels - 23rd Sep 20
Beware of These Faulty “Inflation Protected” Investments - 23rd Sep 20
What’s Behind Dollar USDX Breakout? - 23rd Sep 20
Still More Room To Stock Market Downside In The Coming Weeks - 23rd Sep 20
Platinum And Palladium Set To Surge As Gold Breaks Higher - 23rd Sep 20
Key Gold Ratios to Other Markets - 23rd Sep 20
Watch Before Upgrading / Buying RTX 3000, RDNA2 - CPU vs GPU Bottlenecks - 23rd Sep 20
Online Elliott Wave Markets Trading Course Worth $129 for FREE! - 22nd Sep 20
Gold Price Overboughtness Risk - 22nd Sep 20
Central Banking Cartel Promises ZIRP Until at Least 2023 - 22nd Sep 20
Stock Market Correction Approaching Initial Objective - 22nd Sep 20
Silver Bulls Will Be Handsomely Rewarded - 21st Sep 20
Fed Will Not Hike Rates For Years. Gold Should Like It - 21st Sep 20
US Financial Market Forecasts and Elliott Wave Analysis Resources - 21st Sep 20
How to Avoid Currency Exchange Risk during COVID - 21st Sep 20
Crude Oil – A Slight Move Higher Has Not Reversed The Bearish Trend - 20th Sep 20
Do This Instead Of Trying To Find The “Next Amazon” - 20th Sep 20
5 Significant Benefits of the MT4 Trading Platform for Forex Traders - 20th Sep 20
A Warning of Economic Collapse - 20th Sep 20
The Connection Between Stocks and the Economy is not What Most Investors Think - 19th Sep 20
A Virus So Deadly, The Government Has to Test You to See If You Have It - 19th Sep 20
Will Lagarde and Mnuchin Push Gold Higher? - 19th Sep 20
RTX 3080 Mania, Ebay Scalpers Crazy Prices £62,000 Trollers Insane Bids for a £649 GPU! - 19th Sep 20
A Greater Economic Depression For The 21st Century - 19th Sep 20
The United Floor in Stocks - 19th Sep 20
Mobile Gaming Market Trends And The Expected Future Developments - 19th Sep 20
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

The Recession Has Ended! Has the Stocks Bull Market Also?

Stock-Markets / Stock Index Trading Oct 30, 2009 - 02:54 PM GMT

By: Sy_Harding


Best Financial Markets Analysis ArticleThe Great Recession has ended. Halleluiah! It was the worst recession in many ways since the Great D. Just imagine. After four straight negative quarters the economy recovered in the third quarter. Not only did it recover, but GDP rose 3.5% in the third quarter, even more than the consensus forecast of a gain of 3.2%.

The relief is so great you can . . . . well, you can hardly detect it.

The stock market loved it – for about seven hours, with the Dow closing up 200 points on Thursday after the report was released. The market certainly deserved a day of celebrating that it had been right in anticipating the end of the recession by rallying all summer.

However, the market began declining ten days ago, as the GDP report time approached. And after only a one-day rally to celebrate the report, it turned back down with a vengeance the next day.

Was it a classic example of buying on the rumor and selling on the news, or perhaps of reality setting in?

 Some quite savvy analysts began warning in May that the rally was getting well ahead of reality in its excitement, factoring into prices not only that the recession was bottoming, but that the recovery is going to be spectacular.

There have been warning signs lately, with economic reports coming out over the last month indicating the recovery might instead be problematic.

Even a peak behind the curtain to see how the GDP growth in the third quarter was achieved raises questions about the sustainability of the improvement, casting doubt on whether it can flow over into coming quarters, or even the current quarter.

For instance, consumer spending rose 3.4% in the third quarter, providing a good part of the improvement in GDP (gross domestic product). That was terrific since consumer spending accounts for 70% of the nation’s economy, and the economy can hardly be expected to recover without a big improvement in consumer spending. Unfortunately, the 3.4% increase in spending was accompanied by a 3.4% decrease in consumer income, not a sustainable situation.

The extra spending also showed up mostly in sales of big-ticket items like houses and autos, which produced a rebound in home-building, and auto manufacturing. However, we all know the catalyst for much of that spending was not normal, but due to the government’s ‘cash for clunkers’ program, and bonuses to first-time home-buyers.

Indeed, the bottom literally dropped out of auto sales once the ‘cash for clunkers’ program ended.

And unfortunately it was reported on Wednesday that new home sales declined 3.6% in September, even though the bonus for first-time home-buyers was still in effect. That was versus the consensus forecast that new home sales would rise 5% in September, and came on the back of the previous week’s report that ‘existing’ home sales fell 2.7% in August, the first decline since March, and the report that permits for future single-family home ‘starts’ fell 3% in September.

Third quarter GDP also got a boost from inventory building. Businesses had allowed inventories to drop at a record pace during the worst of the recession last winter, and began replenishing their shelves in the third quarter, encouraged by improving consumer confidence and rising retail sales. But that increased economic activity will not continue if the replacement goods don’t move off the shelves any faster than they have for most of the year. Whether they will or not will depend to a great extent on consumer confidence.

Unfortunately, the latest reports on consumer confidence are not encouraging either.

The Conference Board reported this week that its Consumer Confidence Index fell to 47.7 in October from 53.4 in September. On Friday Reuters/University of Michigan reported their Consumer Sentiment Index fell to 70.6 in October from 73.5 in September. The majority of consumers in the poll also reported that their financial condition had worsened in October for the thirteenth straight month, the longest decline in the history of the survey. It shouldn’t be a surprise, given the staggering number of people who have lost their jobs, and the surprising percentage of homes that are no longer worth as much as their owners owe on them.

What consumer confidence does not need right now is another substantial decline in the stock market, mutual funds, 401K plans, and IRA’s.

But in spite of the GDP report, or perhaps because of it, the market has returned to the decline that got underway a couple of weeks ago. Its focus is now on further down the road, which means wondering if the Q3 economic improvement is sustainable.

The important report in that regard may be the Labor Department’s employment report for October, next Friday, and whether it will show fewer job losses than recent reports.

Meanwhile, I hope the market can avoid a panic while waiting.

Short-term traders, including the big-program trading firms continue to dominate the market. When they reverse from selling into rallies to buying the dips, as they did in early March, it can make for an exciting and explosive upside reversal. But if they reverse again, from buying the dips, to selling into the rally attempts it can lead to panic, especially after an unusually large rally has investors confident that they will see only higher prices, and are unprepared for something different.

Sy Harding is president of Asset Management Research Corp, publishers of the financial website, and the free daily market blog,

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 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


30 Oct 09, 20:41

Long term, the stock market should move higher. But short term is likely going lower. But how can an investor figure out the trends and be able to profit from them? After all, the "buy and hold" easy strategy is dead.

I believe the answer is through stock market timing signals.


Its daily DJIA index trading signal is up a respectable 65% for the year (as of October 29, 2009) and it is free of charge for individual investors.

02 Nov 09, 09:23
This is not good!

This is not good as we expected! The government should make a long term solutions. We need more jobs. I want to help Thank you!

Post Comment

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

6 Critical Money Making Rules