Optimists are loving the positive economic news coming in from all corners of the markets, but there are many skeptics who don’t seem entirely convinced. Are stocks and exchange traded funds (ETFs) simply on an early summer rally, with a correction around the corner?
Everybody is wondering if this recent market rally will last, or if the reality of it is that there another market correction waiting around the next corner, jolting us back to doom and gloom. The Economist reports a slew of positive (or at least better) news that has been propelling the markets forward:
- On May 29, revised first-quarter GDP figures for America showed that the economy had contracted slightly less than had earlier been reported.
- In addition durable-goods orders in the country rose by the most in 16 months.
- Worldwide, in India, Europe and Japan, there has been positive economic data to report.
For optimists, this and other news are all signs that might point toward the beginning of the end of the “Great Recession”.
But the skeptics cite a few reasons as to why they’re not jumping in feet first just yet. One particular concern is that the financial and credit problems at the root of the global recession have not been dealt with satisfactorily. Many economists believe that until the banks are fixed completely, the rest of the world recovery is not possible. Nevertheless, household spending may remain weak because of high levels of debt and uncertainty.
Will the prediction of remarking that a doom-and-gloom scenario is still imminent, with continued contraction for a long time to come actually become an optimistic outlook at the end of this?
Buying back into the market, especially after such a nerve-wracking time as the last year was, can be an emotional and even scary experience. But by having an entry and an exit strategy and looking for those areas that are moving above their long-term trend lines, you can at least give yourself the opportunity to get into what may potentially be a long-term uptrend. If you’re still having trouble making the buy when all signs say “go,” do additional research that supports your position. It may make you feel more comfortable.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.