Dow Jones at 12,000 Again: Here’s What Happens Next

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Dow Jones at 12,000 AgainHeres What Happens
Next
By- Michael Lombardi
http//www.profitconfidential.com
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• The Dow Jones Industrial Average blew past the
  psychologically important 12,000 level yesterday.
  What a feat!
• Less than a month ago, on October 4, 2011, the
  Dow Jones Industrial Average was at its lowest
  level since September 2010 10,400. The widely
  followed stock index has gained 1,800 points, or
  17.3, in less than a month.
• I know that everywhere you look in the media
  today you will read and hear that the stock
  market took off yesterday because European
  leaders and European banks have agreed to a
  bailout to save Greece. But this is not the real
  story as to why the stock market ploughed through
  the 12,000 markonly inexperienced market
  watchers can be crediting activities in Europe.
• The real story here, the reason stocks have risen
  so sharply from the beginning of October, is that
  the stock market became so oversold. How quickly
  we forget. The stock market had a terrible
  summer. The Dow Jones Industrial Average
  collapsed more than 400 points on several days in
  August.
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• The stock market simply became severely oversold.
  When you have stock market advisors turning to
  their most bearish level since March, 2009, the
  Dow Jones Industrial Average will simply propel
  the other way. Never forgetin the majority of
  cases, the market does the opposite of what is
  expected of it. When the majority of investors
  and stock advisors are bullish, the market will
  go down. When the majority of market players are
  bearish, the market will rise.
• Lets face the facts. At a level of 10,400, the
  Dow Jones Industrial Average produced a dividend
  yield of three percent. Compared to a three-year
  U.S. T-bill yield of 0.52, stocks were a
  bargain. And thats exactly what I been yelling
  about since the summer (Stock Market Gold An
  Opportunity Like Weve Never Seen Before?).
• So Michael, where do stocks go from here?
• I believe stocks will continue to rise in the
  immediate term. The Dow Jones Industrial Average
  has momentum to move higher. I believe word is
  spreading that stocks are a good alternative to
  other investments. As stock prices rise, more
  stock advisors will turn bullish. And this
  exactly what this secular bear market wantsmore
  investors to get back into stocks.
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• Where the Market Stands Where its Headed
• Ive been writing in this column about the Dow
  Jones Industrial Average getting back up over the
  12,000 and thats exactly what we got yesterday.
  In a huge move, the Dow Jones Industrial
  Average propelled yesterday to 12,208. The
  worlds most widely stock market index is up 5.6
  for 2011, not including dividend payouts. This
  market is looking more and more like 2010s all
  over again (Todays Stock Market Making Money by
  Copying Last Years Action).
• It has long been my belief that we are in a bear
  market rally that started in March 2009. That
  rally will take stocks higher first, before the
  bear market enters Phase III of its cycle.
• What He Said
• Consumer confidence does not change overnight.
  In the U.S., 70 of GDP is based on consumer
  spending. And in my life, all the recessions I
  have seen or studied have only come to an end
  when consumers started spending. With consumer
  sentiment getting worse, and with the U.S.
  personal savings rate at near record lows, it may
  take two or three years for consumers to start
  spending again.

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