Photo: Nokia’s Official Flickr
After a one-day pause, stocks resumed their epic rally.First the scoreboard:
Dow: 13,954, +72.4, +0.5 per cent
S&P 500: 1,507, +7.6, +0.5 per cent
NASDAQ: 3,153, -0.6, -0.0 per cent
And now the top stories:
- The Dow and S&P 500 are extending their epic post-crisis rallies. And they’re not very from their all-time highs. On October 9, 2007, the Dow closed at 14,164. The S&P 500 closed at 1,565 on that same day.
- The Case-Shiller home price report showed that prices climbed 5.52 per cent in November, which was right in line with expectations. This confirmed to everyone that the U.S. housing recovery persists.
- However, the latest reading of consumer confidence kept the optimists in check. The Conference Board’s reading of consumer confidence plunged to 58.6. Economists were looking for 64.0. “The increase in the payroll tax has undoubtedly dampened consumers’ spirits and it may take a while for confidence to rebound and consumers to recover from their initial paycheck shock,” wrote the Conference Board.
- sceptics are worried that stocks can’t continue this huge rally. But there are also plenty of strategists who see plenty of reasons for more gains. One of the most popular bullish arguments right now is the idea of a “great rotation” of funds out of bonds and into stocks.
- Citi’s Robert Buckland also examined past experiences with huge stock market rallies. He found that previous 20 per cent rallies were followed by addition double-digit gains when the markets met five conditions: “(1) lower than average starting valuations, (2) double digit EPS growth, (3) rising PMIs, (4) higher US government bond yields and, (5) sustained flows into equities.”
- Fidelity portfolio manager Jurrien Timmer closely examined the secular bull and bear markets going back to 1871. He found that the average secular bear market lasted 14.5 years. He also noted the secular bear market that we’re currently in is “getting a bit long in the tooth” now that it’s in its 13th year. This means we could be witnessing the dawn of a new stock market super cycle.
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