A friend of mine asked me why is the stock market so good today? He’s been reading about the market trending higher. He was one of my friends who lost so much money in the last bear market. I think many people thought there would be no turn around. But everything runs in cycles and the stock market today is much higher than it was a couple of years ago.
Even though the stock market today is higher, you still have to pay attention to the overall market trend as it can change anytime. You do this by reading the IBD every day, checking out the day’s action on the charts, watching the IBD TV market wrap and reading the Big Picture column. The Market Pulse has a current outlook available each day. You want to pay attention to this on a daily basis and only invest when the market is a confirmed uptrend. If you do that, you’ll see your results improved.
The stock market today might be moving with the dollar.
Aside from that, I think there are a few reasons that the stock market is probably doing better. The first is that companies earnings have improved. This translates into higher stock prices. The second reason is low interest rates. Low interest rates are good for the stock market today. You can see that when interest rates rise, like they did in China this week, the market reacts by falling. Once the Federal Reserve Bank starts raising rates at some point, you’ll see the market fall. The final reason that I think the market today has been going higher is because dollar has been falling. I think that when the dollar falls it pushes the stock market higher in the short run. I think this because the inherent value must level out. The value of the stock is the same even if the dollar is worth less. You can see on the chart that the dollar strengthened recently and the market didn’t do as well as it has been.
But the usual reason that the stock market rises is because the “big money” or institutional money has been buying stocks. When this happens, the increased demand forces prices higher. You can see this in the form of higher closes on higher volume. Watch the charts of the major indexes daily and watch for this tell tell sign of why the market might be doing better today.
Anyway, that’s my perspective. Good luck on your stock market investing program.
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