Strongest Six Months In A Decade
It is difficult to imagine a new bear market starting when the economy is
growing and the technicals are favorable. Tuesday's GDP report showed the U.S.
economy is coming off the strongest six months of growth in a decade. From Bloomberg:
Gross domestic product, the value of all goods and services produced,
rose at a 3.9 percent annualized rate, up from an initial estimate of 3.5
percent, Commerce Department figures showed today in Washington. The median
forecast of 81 economists surveyed by Bloomberg called for a 3.3 percent
gain. After the 4.6 percent increase in the second quarter, it marked the
biggest back-to-back advance since late 2003.
The Weight Of The Evidence
Outside of GDP, how does the bigger picture look? Things have happened fast
over the past four weeks. This week's stock market video takes a step back
and looks at the new evidence that has surfaced in the stock market since the
October 15 low.
Given the still constructive environment for growth assets, we recently reduced
exposure to bonds (IEF) and added (once again) to our equity stake (SPY). Even
the strongest rallies experience red days from time-to-time, meaning we have
to have realistic expectations in the short-run. However, it is possible the
market is just digesting gains and ready for another push higher.
As always, the market and data will guide us if we are willing to wake up
each day with a flexible, unbiased, and open mind.
