Bullish S&P 500 Chart

Browsing financial websites it seemed nearly everyone fell into two camps …. the market would test the lows or the market would fall 5 to 10 percent. It was hard to find anyone that thought the market would hit new highs. The public’s skepticism and negative sentiment are hallmarks of a new bull market.

With the S&P 500’s move to a new high, an inverse head-and-shoulders bottoming pattern is complete. This pattern developed over a ten month period and is a further sign of bull market. I’m expecting a great fourth quarter.

David Vomund

www.etfportfolios.net

Economic Outlook

It would be easy to be gloomy on a day like this. The market’s down big and the news headlines site the majority of economists point to a slow recovery (click here).

It is easy to be gloomy until you ask how many of these economists called the Great Recession. They were wrong then and I suggest they are wrong now. The pace of the recovery will be stronger that what most expect (with the exception of job growth).

The economy will bounce back quickly. The market may predict a “W” shaped recovery but it will be in the shape of a “V.” I expect this quarter’s GDP growth to exceed 3 percent (that’s not a misprint). It may even exceed 4 percent.

Never underestimate American’s appetite for spending. The worse recession since the 1930s is creating “pent up” demand. We can see this from the popularity of the Clunker program. Many of the clunkers being traded in could be sold for around $2000 on the open market, so consumers are only saving $2000. They want new cars.

We’ll find out if I’m right around the end of the year. If I’m right, stocks will be far higher.