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Stock Market Comeback
Since March 9, stocks have really turned around.

2009 has showed us how fast stocks can recover. Have you looked at the market lately? Hopefully, you haven’t gotten out of it. This has been a very encouraging spring for the stock market investor. Some statistics:

  • Between the March 9 lows and the end of May trading, the Dow Jones Industrial Average gained 29.83%, the S&P 500 35.86%, and the NASDAQ 39.86%.
     
  • March, April and May 2009 represented the best 3-month stretch for the Dow since November 1998, the best 3-month stretch for the NASDAQ since December 2001, and the best 3-month stretch for the S&P 500 since June 1933.1

These gains are positively historic. The pessimist will say sure, this has been a historic bear market; you’re going to see big ascents and descents. The optimist will suggest that things are turning bullish.

An important technical milestone. On June 1, the S&P 500 crossed over its 200-day moving average - a bullish indicator. The last time this happened: May 2008.2

So much for doom and gloom. Do you remember back in January when analysts were worried about stocks losing another 20-40% this year? The S&P 500 sank 10.9% across the first 12 trading days of 2009, its poorest start to a year ever.3 It was time to haul out that old Wall Street saying: as the first few days of trading go, so goes the year.
 
However, the year hasn’t gone that way. We have half a year to go, of course – but as this is written, the NASDAQ is up double digits for 2009, the S&P 500 is positive for the year, and the Dow is on the verge of moving into positive territory.4

Is a bull market emerging? Some see a baby bull running right now. In May, analysts at JPMorgan Chase presented their opinion that we were in the second month of a new bull market. They noted that if March 9 was the bottom (and they actually went out on a limb and called a March 9 bottom), then the spring 2009 rally was turning out to be one of the longest rallies from a trough in history.5

On the other side of the coin, you could argue that this is an extraordinary bear market rally in an extraordinary bear market – although we have already seen a bunch of remarkable rallies and plunges over the last several months.

One psychologically nice milestone would be for the Dow to get back to the 9,600 level. On November 4, 2008, it closed at 9,625.28 after a 305-point rally on Election Day.6 The next day, the Dow fell below 9,200 – and it hasn’t been above 9,200 since, though it did top 9,000 twice in early January.7

Still in stocks? Give yourself a hand. If this is the new bull market, you are not missing it. And if it isn’t, the markets certainly have improved from earlier this year. In stock market investing, patience and perseverance are essential. Those who stay the course are often thankful they did.

Historically, rising stock markets have often been indicators of waning recessions. Many analysts think the economy could improve notably in the coming months. Is this a good moment to review your portfolio? You might want to talk to a financial advisor.

These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information.


These are the views of Peter Montoya Inc., not the named Representative nor Broker/Dealer, and should not be construed as investment advice. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information..

Citations.
 1 http://cnbc.com/id/31004289 [5/29/09]
 2 cnbc.com/id/31048250 [6/1/09]
 3 usatoday.com/money/markets/2009-01-20-stocks-tuesday_N.htm [1/21/09]
 4 usatoday.com/money/default.htm [6/4/09]
 5 forbes.com/2009/05/19/jpmorgan-bull-calls-markets-recovery.html [5/19/09]
 6 money.cnn.com/quote/historical/historical.html?symb=INDU&close_date=12/4/2008 [6/4/09]
 7 money.cnn.com/quote/historical/historical.html?symb=INDU&close_date=2/1/2009 [6/4/09]