[/caption]Even if we are not partakers in the investment culture, it seems that when we hear that the Dow is trading above or below 10,000, we know that number is an important barometer that measures how the market is faring, and moreover, the economy in general.
Yesterday, the New York Times was lauding the fact that the stock market bounced back and went on a run…ending up over the important threshold of 10,000.
There were important variables that contributed to the Dow’s good fortune; the Dow jumped some 3.13% as investors thought that the market was oversold, and that the economy is stronger than perceived.
Giving credence to the market being oversold is the fact that the important barometer known as the S&P 500 Relative Strength Index, which measures advances and declines, registered above 30 on Monday – a reading of 20 to 30 is said to be a sign that market is oversold.
Investors who had recently been taking shelter in treasuries returned to equities, because of all the bargains out there. The news that consumers were spending more also propelled the purchased of equities, and the better than expected earnings by State Street (STT) gave investors an inclination that the other banks reporting their earnings in a few weeks bode well for the Dow.
These scheduled banks to report are JP Morgan Chase, American Express, and Bank of America – all these stocks soared, with investors thinking that their respective earnings will beat expectations.
Even pending European financial news, pertaining to the region’s continental banks, contributed to the Dow’s recovery; the “stress tests” undertaken by European officials to see if their banks could withstand relative financial hardships are about to be released.
This gives the market confidence that Europe is trying to up its' banking institutions, so that they do not have the financial melt down we had here in the United States, which preceded our current recession.
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