Is the 8-Month Correction Over?

Is that a typo?  It must be as we look at the S&P 500's chart and see that peak in the market only 7 weeks ago.  But no, it is not a typo.  You can see our point as we've been proclaiming most of this year that the market reached its peak in momentum in October to November of 2010.

Much like 2010, we've had a "soft-patch" in the economy for the second quarter.  Obviously, the massive earthquake in Japan in March of this year has had an impact worldwide on economic progress.  But with the mood of corporate managers still enmeshed in the memories of 2008, it didn't take much to pull the reins in.  Not only that, but the banks have been putting off taking that step of biting their foreclosure bullets, but this year, that resistance seems to be coming to an end.  So, that has impacted housing prices...and the economy. 

But money has come to the rescue again, as we've seen very substantial progress given lower interest rates and monetary stimulus - hence our Monetary Composite has moved deeply into its most bullish position.  You don't see this powerful monetary push except in those periods when economic fears are intense (and consequently when stock market bottoms are made).

So today, we remain very bullish on our intermediate to long-term view, especially based on that strong signal we received from our Asset Allocation Model last week.

To view today's complete Market Comment, click here.

Don Hays

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