Has The Stock Market Bottomed Out?

The credit markets are slowly starting to come to life, and even homebuyer’s anxiety is seemingly disappearing. If that’s not enough, economic indicators are showing signs of improvement from earlier in the year.

Yet nothing can signal a change in sentiment than the Dow Jones Industrial Average itself. The market has been on a rampage as of late rallying almost 1500 points over the past month. Investors that have had their money on the sidelines are now starting to shove it back into the market. Simply put, there are more buyers than sellers.

So has the market already bottomed out? The surprise profit from Wells Fargo sold many investors to believe that this was in fact the end of the plunge and the beginning of something special.

Yet I am not totally sold and neither is President Barack Obama’s top economic advisor, Lawrence Summers, who asserted, “It was too soon to forecast how strong the rebound would be and when it would take hold.” While I do think that our markets are improving dramatically, a further market improvement will not come without bumps in the road. These bumps could drop us back down to the low levels of early March.

With the unemployment level still rising, confidence in the economy is still low, and may be low for some time. Many suspect it will be several months or longer before the economy kicks it up a notch into growing mode. Until the all-important unemployment level stops rising and starts declining you can bet that our economy will not be viewed positively. Until this positive sentiment of the economy emerges you can bet that the stock market has not seen the end of its tumultuous decline.

Moreover, an advance or decline in the market weighs tremendously on the results of the banking sector’s first quarter reports. While Wells Fargo fared surprisingly well that doesn’t forecast how other bank’s earnings like Citigroup or Bank of America will fare.

Even with the economy perking up with likely the most terrible part of the recession being over, the stock market may have not yet hit the bottom. Over the next few weeks we will get a definite direction that the overall market is going to take. Hold tight and strap on your seatbelts, as the ride might get a little bumpy when the banking sector reports and unemployment filings are announced. These filings and reports plus overall market sentiment will dictate whether the market will go lower or higher.

By Justin Bostwick
pennystocker.com