In January of this year the right wing was up in arms about -- well, everything. Every one of Obama's plans was going to destroy the economy. And from January through March the right wing's favorite barometer was the stock market. Every blog posted charts of the markets when they were moving lower. According to the right wing blogs this was a sign that the US was heading into the abyss and it was Obama's fault.
Now there is a problem with that theory. The markets have been in a rally since early March.
The SPYs (S&P 500) have rallied about 40% from their March lows. Today they broke through important technical resistance. The average has broken above the 200 day exponential moving average indicating we're in a bull market.
The QQQQs (NASDAQ) is up about 50% from its March lows. This average is also above the 200 day EMS indicating a bull market.
The IWM (Russell 2000) is up over 50% and is above its 200 day EMA indicating a bull market.
Today the transports moved through upside resistance as well. In addition, this average is up over 60% from its March lows.
As the charts above indicate all the major indexes are moving higher. Now -- past performance is not a guarantee of future results. However, these charts do indicate some important developments.
1.) Despite all the moaning from Wall Street about, well, everything, people are putting money in the markets again. This indicates that -- despite the complaining -- people think profits are coming.
2.) The stock market is a leading economic indicator. The markets moving higher indicates there is enough confidence in the future to put money into riskier ventures like stocks. This is a very positive development.
3.) The right wing blogs have since moved onto to other talking points because this one blew up in their face.
Now -- there are still plenty of problems. In short, we're nowhere near out of the woods. We're still looking at a consumer who is paying down debt and a business sector that has pulled back heavily from investment. That means growth will be sluggish for sometime. But that does not take away from the importance of this development. The risk appetite is returning which bodes well for the future.
So -- if you're from the right wing side of the blogsphere answer this question: why are the markets rallying right now?