Stock Market: Why The Bears Have No Teeth

(Drivebycuriosity) - Is the correction already over? Did we see a real correction? With today´s gains - the third up day in a row - the S&P 500, the gauge for the stock market, has erased around half of the mild pullback (minus 5%) since its all-time high from January 15th. I believe that we will soon see a new all-time high.

While the alarmists are lamenting about the taper (slow & gradually reduction of the monetary stimulus programs) and problems in a row of emerging markets (Turkey, Argentina, Ukraine) the market seems to focus again on the good news.

The current earnings season (Q4 20013 reports) is proceeding encouragingly.  Of the S&P 500 members who have reported so far, 76% beat analysts’ profit estimates, while 66 percent exceeded sales forecasts (bloomberg). Profit for the benchmark’s stocks rose by 8.3% in the fourth quarter of 2013 and revenue by 2.7%, according to analyst estimates compiled by Bloomberg (bloomberg).

Last week we learned that the U.S. service sector (ISM services), that covers around 2/3 of the economy, gained speed in January. We also heard that Europe´s manufacturing is getting better (ISM manufacturing).

I believe that rising company earnings & an advancing global economy will fuel further gains on the stock market and the S&P 500 could climb to 2,000 point and more through end of this year.