Why Did Stocks Make New Highs? 19/05/2015

The S&P made a new high Monday and yet economic data is the worst it’s been in 2-3 years. Why does it continue to climb in the face of this weakness?

Because that’s what bull markets do!

Yes, I know that answer seems unsatisfactory, but right now it’s the only logical answer. This harkens back the article I wrote last September:The Natural Gravity of the Stock Market.

The basic premise is that the natural direction of stocks is up unless a stronger force comes around to suppress prices. Typically that would be a recession. So even with the current soft data no one seems to think it spells recession. And thus stocks are floating higher once again.

This is a classic case of “climbing the wall of worry” .

Best,

aka Steve Reitmeister

Executive Vice President, Zacks Investment Research

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