Despite Economic Worries, The Stock Market Surges [AUDIO]
Even with continuing fears about the sluggish national economy and the European debt crisis, Wall Street had a rip-roaring month in January- and many expect the trend to continue.
The S & P 500 saw a 4-point-4 percent gain last month – the biggest increase since 1997- and according to data from the Stock Trader’s Almanac, when stocks rise at the beginning of the year, there’s an 89 percent chance the entire year will be profitable.
Chris Cordaro, the Chief Investment Officer for Regent Atlantic Capital, says traditionally February has been a weak month for stocks, but “if we look at the last 50 days – the stock market has been moving up ahead of its average over the last 200 days – meaning that in the short term, people are feeling more positive about the market…when that occurs, that’s usually good news for stocks over the next couple of months…because as the market keeps moving upwards, people take notice that the market is doing well- and what ends up happening is that more and more investors start coming into the market – and what that does is that increases demand for stocks which pushes the price up – which then gets even more investors to notice and then put more money to work in the stock market.”
He thinks stocks are fundamentally cheap right now – because what’s happened over the past 3 years is that investors have “sold out of their stock funds – and there’s lots of cash sitting on the sideline or in bonds, so if we start getting a little interest in stocks and stock prices moving upward as they’ve done over the past 4 months, you could get a lot more investors coming off the sideline and pushing the market higher.”
Cordaro adds “it’s definitely a possibility that we hit 14 thousand on the Dow, and we hit our new high at the end of the year or sometime next year…investors should remember that stocks are selling cheaply, and when you buy stocks when they’re cheap, you’re generally rewarded over the long run.”