When is the pickup?

investmenttool.com Cover Story

There seems to be a pickup going on in the economy. It is slow, and probably won't stop the Fed from lowering rates, but all the signs are there. The question is when is the market going to realize it and start another upward move.

Initial Claims for unemployment don't seem to be running as high as they would in a stagnant economy. Energy prices are gradually falling as new supplies flood the market. The index of leading economic indicators is starting to perk up. Consumer confidence is rising at a modest rate.

The earnings warning season is a little sparse too. On Friday Intel, Juniper and 3Com warned and the market dropped half as much as it did during the last warnings season. Early this week, we might see the market shrug off those warnings.

The economy is not growing at a 5% rate, and seems unlikely to do so any time soon, there is hope on the horizon. For 12 weeks, starting in July the government is going to be mailing out tax rebate checks. Some of that money is going to be spent, boosting the bottom line of retailers.

Some of that tax rebate are going to be invested in the stock market. That will help the price of shares a little bit. Rate cuts are going to start showing up on bottom lines all over corporate America as lower interest expenses.

The market rarely makes a major move in a slow and methodical fashion. There always seems to be spark that spurs a vertical move to a new plateau. I sit back wondering what will be the trigger this time. A company busting earnings estimates? A major economic report? I don't know yet, but those who think the market will make anemic process will not be right forever.

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Shmuel Protter
investmenttool.com

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