Stock Market Rally Continues

The S&P continues to move higher. Today we saw levels unseen since May 1^st of this year, which coincidentally marked a top that would eventually lead to an approximately 150 point sell off to 1262. While the overall economic picture is rather dim (Forty-one straight months with unemployment above 8.0%), a large portion of the economic indicators have been improving, or at least not as bad as we’ve become accustomed to. Housing, exports, consumer spending, and employment numbers have seen some improvement according to the recent data. However, many will argue that the rate of improvement is way too slow and that the way some of these numbers, most notably employment numbers, are calculated can be misleading. Data aside, the biggest reason this market is catching a continuous bid is due to the Fed. Most traders seem to think that potential for collapse in Europe, improving but weak economic data, and high unemployment will encourage the Fed to enact further easing. So if bad news means more QE is likely, should the market rally or selloff based on bad news? If we see good news, should the market sell off due to the need for more QE lessening, or rally due to the signs pointing to recovery? Those have been difficult questions to answer and will continue to be. The next Fed meeting is set to take place Wednesday, September 12^th with the meeting announcements set to take place on Thursday, September 13^th, and this debate is likely to persist until then. Hopefully we’ll get a little more clarity on this topic at that point.