Economic Recovery Underway... Market Responding

Something interesting I noticed over these past few weeks has been the shift in the position of the "expert" market watchers. Instead of telling investors to "wait for the bottom," they have actually changed their strategy. Now they are telling everyone to "wait for the pullback." If you are a regular Markedoc Report reader the recent market surge should have been no surprise to you. (If you are new to the Marketdoc Report, take a look at our posts going back to February.) Not only did many professional money managers not recognize the makings of this powerful rally, some actually NEED the market to pullback in order to get on board!

Make no mistake about it.. we are in economic recovery. The market has been responding to this over these past four months. Yes, we can debate whether it will be a "V-shaped bottom," or a "U-shaped bottom," consumer driven recovery, yada yada. This really doesn't matter all that much. The reality is that from the Dow's low in March to its intraday high in August, we have seen an impressive 47% return in five short months! The typical early economic recovery will see an average market return of about 36%. The market has reached our Marketdoc Report goal of a 40% retracement from the March low. From a technical standpoint there really is not much resistance until we reach the 10,000 level. A pullback now would actually be a healthy consolidation for the market. We could actually go higher as the now-panic-stricken money managers HAVE TO GET INTO THE MARKET!

Here is a sample of some of Marketdoc's year-to-date returns:

Company/Av.Cost/Current Price/Return%
American Axle $ 1.71 $ 6.67 290%
Bank of America $ 11.69 $ 16.84 44%
Ford $ 3.16 $ 7.65 142%
Fifth Third Bank $ 1.36 $ 10.11 643%
UAL Corp $ 3.60 $ 5.65 56%
YRCW $ 2.36 $ 2.20 - 7%

Average portfolio return 51.41%

It doesn't matter whether this rally is "real" or not. We have seen some excellent trading opportunities this year! Keep an eye on the Transports as this sector should rally strongly in an early economic recovery. We have already seen this to some extent but not all the Transports have participated.

Disclaimer: The above is for information purposes only. Any decision to buy, sell, or hold a specific investment should be reviewed by your personal investment advisor.