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There’s a Bull Sneaking Around
Quietly, there has been a bull sneaking around the markets over the past three weeks. The S&P 500 index (.INX) technically began a new uptrend on November 20. By climbing 20% from its low on the 8th to the 20th it became a new bull market by definition.
The shortest bull markets for the S&P lasted only 24 days. With today, we are up to 22. To cancel this uptrend, the S&P would have to drop by 20% from its high. So until it hits 727.80 we’ll remain in an uptrend.
Interestingly enough, some of the biggest movers supporting this drive have been from the consumer discretionary spending sector. Representing half of the top ten: Lennar (NYSE: LEN), General Motors (HYSE: GM), Liz Claiborne (NYSE: LIZ), Jones Apparel (NYSE: JNY) and DR Horton (NYSE: DHI) have all seen significant gains.
While GM can be explained by optimism over a potential bailout, the others can’t be explained away so easily. Especially since consumer spending is down and – for the first time ever – household debt dropped.
Surprisingly, consumers are spending more at department stores. The question is if this has been due to promotions and discounts, how much has the additional spending impacted the bottom line. If the discounts have sacrificed profits, we’ll see these S&P members fall.
Companies mentioned in this article: LEN, GM, LIZ, DHI and JNY.
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