It's Still Tough to Trust These Rallies
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Good Tuesday afternoon, one and all. Well,
how about the market today? Stocks were still on the fence as of Monday's close, but a surprisingly strong reading on the new-home sales front prodded the market into bullishness. Maybe things aren't so bad after all.
In any case, I think what happened today (and we're still not so sure it's the beginning of a trade-worthy rally) kind of supports something I've been thinking for a while. That is, everything's been anemic with economic data, and so too have stocks. We need some big, bold data to shake the market out of this rut. It's pretty clear stocks can't move higher because of valuation concerns, but it's equally clear traders aren't willing to send stocks lower, out of fear of missing out on what might happen later this year. After all, the economic news and earnings reports were never "bad". They've just not been "great" in a while. Today's surge in new-home sales was some truly "great" data, and traders made it clear they will respond to it.
Now they just need to see a little - ok, a lot - more of it. When it all comes down do it, investors just need to believe earnings will grow. That's something they haven't had in a while.