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The Dow tested the November lows again last week, and held, in the face of bad economic news associated with job losses. Earnings continued to be a mixed bag with the tech sector performing a bit better than expected, consumers performing a bit worse than expected, and financials performing as badly as expected.

With the Obama stimulus package getting closer to reality, along with various other government stimulus packages enacted worldwide, there is a sense within the market that the worst is upon us now. Because the Dow often leads the economy out of recessions by a couple of quarters, the current resolve of traders may translate into a recovery in the equity markets over the coming months. Historians may look back at the first week of February 2009 as a possible tipping point in sentiment.

Unlike 2003, when there was a bit of a snap-back, one could expect this stock market recovery to be slower, with a few scares along the way. The U.S. economy has already been on a pretty long decline with economic fundamentals eroding since August of 2007.

Source: February Week One: A Tipping Point in Sentiment?