Smart Money Magazine recently ran a story in their July issue titled When To Get Back In the Market.  For the article they interviewed economists, managers and strategists to find out the signs of detecting a true long term rally.  Here are some of the signs:

  • Stock Market Moves – A potential long term rally will have good performance across all sectors, not just a handful.  To view a snapshot of all sectors, check out this Morningstar sector link.
  • Borrowing and Lending – When corporations can get the money they need to expand their businesses and hire new employees, it could mean a healthy environment for a recovery.  The TED Spread is a commonly used metric, which compares the difference between the interest rates on treasury bills vs other kinds of loans.  When that difference is low, it suggests that companies can borrow at attractive rates, which is a sign of a potential recovery.  Check out the TED spread rates here.
  • Business Hiring and Spending – Check the unemployment claims at the department of labor website for signs of a longer term recovery.
  • Consumer Behavior – Check the consumer confidence numbers at the Conference Board business trade group, and look for consecutive months with scores about 50.
  • Housing – Look for new housing starts numbers at the Census Bureau’s New Residential Construction index.

Or, if you have no time to look at all of these indexes, you can use a simple technical analysis approach to investing, you can use one of the options from the post below: