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Stock Market: Sustainable Rally Depends on Confidence Measures
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June 23rd, 2009UncategorizedIt is important that confidence be restored for the recent stock market gains to be more enduring. A few comments regarding this issue are highlighted in this post. As shown in Sunday's â Words from the Wise â review, there is a strong historical relationship between the US Consumer Confidence Index and the 12-month change in the S&P 500 Index. One needs to take a view on the direction of consumer confidence, but should it for argument's sake pick up from 30 to 40 by the end of June, the relationship indicates a S&P 500 decline of 30-35% in year-ago terms. Using end-of-quarter prices, this means an Index at between 832 and 896 by mid-year.
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