For the S&P500, the golden cross back in January has proved exactly correct. As to why the market is roaring, how about:
- Expansive monetary policy. Bernanke has said no rate rises until the end of 2014. Not that that doesn't mean that QE1 and 2 won't be gradually withdrawn. But they aren't needed any more because ...
- The economy has started self-sustaining growth. Rising confidence, a floor in housing, rising employment etc all suggest profits will keep on growing.
Meanwhile, the Ozzie market has just broken out of the top end of a wedge after making its own golden cross in Mid February. Very positive formations.
- Oz market is cheap
- China will start reflating soon
- World mid-cycle growth correction is over
- A$ (surprisingly!) has peaked.
- What else do you buy? Bond yields are rising, cash yields less than shares, property is iffy ....