The S&P 500 bounced mightily on Friday and now back on the north side of the 200 day moving average. The catalyst was a combination of improvements in the Chinese stock market plus the potential for a new debt deal in Greece.
Will this rally last?
Yes, if improvements in China and Greece persist. No if it things falter over there.
Reity, which do you think it will be?
I know you want me to neatly pack this away for you, but it’s just not that easy. Truly any outcome is possible. The best thing I can do is to remind you that Greece really doesn’t matter all that much. It is just a sideshow that will have no real effect on the US market in the long run. China is a more pressing matter as we don’t want a stock market decline to precipitate a recession which would spread economic malaise around the globe.
So let’s keep our eyes on the Chinese stock market and what that means for their economy. Right now they have a 10% bounce in two days. That’s a nice start. Hopefully it continues.
Remember; “the trend is your friend til proven otherwise” . That trend continues to be bullish. So best to stay bullish as well until more convincing evidence forces us to put on bear suits.
aka Steve Reitmeister
Executive Vice President, Zacks Investment Research