Earnings and Cycles Spell Stock Market Rally

Stocks set to rally for 4 reasons:

1 Positive earnings surprises
Second Presidential and 4 quarter cycle
Third The current bull market action
4th Market sentiment screaming buy

Things are finally in our favor. The recent stock market action mixed with a rich American history and sprinkled with large doses of disbelief is setting the stage for the fourth quarter of a relief rally.

1 Yield:

for the stock market always comes to earnings. For the past few years we have had consistent positive earnings "surprises" in each quarter. This, together with the fact that earnings expectations have declined so dramatically in the coming quarters, stocks and bonds are setup for a rally mode.

2 Quarter and Presidential Cycles:

- In the last 30 years, stocks rise more than 75% of the time in Q4 with an average yield of about 8 %.

- 3 year presidential cycle, we have uu case you have not noticed, usually brings the average yield of almost 18 %.

Although exceptions are always possible and things are somewhat skewed (or, as some feel drunk) here late with all state intervencije.2007-2009 bear market began in the third year of the Bush administration and continued through the fourth year, and market has been quite strong for the first two years of the Obama administration.

3 Stock Exchange Action:

stock market recently has been very encouraging. Tuesday 4th October was a great day turnaround. We needed a quick reversal back above the level of failure to show shakeout is complete, or to another major leg down, and we get to the recovery. I call for a rally from here, and I'm With this forecast.

Yesterday's move has brought us to the top of the trading range so that the next few days will tell priču.Snažniji growth continued strong demand and volume, will be positive for tržište.Ključ here, although more than 1-2 days over the August rally highs. Just as it breaks down early in August to October 3rd/4th downs proved short-lived and overaggressive bear trap, apparently switching can be just as effective as a trap for the unwary bulls. The best evidence of a trap would be a wave of new recovery highs on heavy volume that does not follow through. This will be the so-called "terminal up-thrust," which would indicate the end of the rally and we jump back to the bottom of the August-September trade area.

History is on our side here. Since World War II, when the market fell more than 14% for the quarter, a strong rally was followed by 89% of the time. In addition, we had two very similar cases that occurred after 2000 and 2007 market peaks, with positive deviations in development after the break downs of trading ranges. 20th December, 2000, S & P 500 broke through the bottom of about two months of trading range and again in mid-March 2008. Both turned out to be the market shakeouts back quickly after breaking lows. In these cases, the meetings lasted for 26 sessions of December 2000 low, gets 8.6% and 44 sessions from mid-March 2008 low growth of 11.7%. Keep in mind, however, that although these meetings are significant, the market eventually fell back to its primary downtrends, which will probably happen here.

4 Negative market sentiment:

This part I love best. Basically, we're in the market can not, a majority feels that it is obvious that the market must go down. Well, folks, if it is obvious, it's obviously wrong! Nobody feels good on the market right now, plain and simple. In the bigger picture, the economy looks like a wounded beagle. For the longer term, I agree. Things will be difficult,