Bad News is Often Good News

One of the things that always fascinates me about the market is how seemingly bad news can often spark a rally.

This morning it was announced that US GDP declined in the third quarter. If we get another decline in the fourth quarter we will officially be in a recession.

We will find out if we got that second quarterly decline sometime toward the end of February 2009, or maybe the beginning of March.

As I've been telling you all, we've been in a recession for at least 9 months now.

Today's news signals to the market that we are already starting to come out of the recession.

That is why the market spiked up on seemingly bad news.

And this highlights the problem of getting your investment advice from the news media. The news media focuses on the current news, the stock market focuses on the predicted news in the future.

History says that stocks begin to rally 60% of the way through the recession. Are we there yet? I'm not sure, but we are close and likely to be there when the news media and the economists are ready to offically announce that we have been in a recession. Again, look for that announcement in late February or Early March of next year.

We still think this current rally will carry us to 10,500 - 11,500 by mid-January.

Stand Fast!