It may have been a modest effort, but modest was still good enough to carry the market to record highs last week. Even more interesting – and perhaps a little surprising – is that volume was growing on the way up. That suggests traders at least have a little faith in the budding rally.
The $64,000 question is, do we/you really believe the market is capable of rallying in late July and early August (historically a tepid time of year) after it’s already advanced 6.3% in just four weeks? Stocks are already over-extended, and shouldn’t be able to keep chugging at their recent pace. The answer: Never say never… especially during earnings season.
We’ll put that answer under the microscope in a moment, after we paint the bigger picture with last week’s and this week’s economic numbers.