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Sept. 20, 2010, 11:30 a.m. EDT · Recommend (3) · Post:
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Dow Theorist believes buy signal is imminent
By MarketWatch
WASHINGTON (MarketWatch) "â? The great recession is one for the history books, according to the academics whose job it is to peer back into the past.
According to the private National Bureau of Economic Research, the recession ended in June 2009. That's the month the U.S. economy began to expand again after 18 months of decline. It was the longest recession since the 43-month recession that began in 1929 and ended in 1933. Read our full story on the NBER's statement on the recession.
Of course, the ruling by the NBER on Monday changes nothing on the ground. Millions are still unemployed, millions of homes are at risk of foreclosure, and consumers and businesses and investors remain extremely cautious.
Stocks are rising, with the S&P 500 crossing the key 1130 level, after Lennar reports a profit, though home-builder sentiment remains depressed.
The ruling is not an all-clear signal.
As the academics put it in their statement: "In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity. Rather, the committee determined only that the recession ended and a recovery began in that month."? Read the NBER statement on the recession.
There's a lot of misunderstanding about what the words "recession"? and "expansion"? mean. To an economist, the meaning is technical: A recession is a period of declining economic activity and an expansion is a period of increasing activity.
To be in an expansion does not mean that everyone is employed, nor does it mean that milk and honey flow endlessly from the Big Rock Candy Mountain.
The U.S. economy remains very troubled, despite the ruling by the NBER that is has been expanding for 16 months. Most economists are predicting several more years of slow recovery.
Remember, economists say that the worst recession in the past 100 years ended in 1933, but in the popular mind, the Great Depression continued for seven more years before the mobilization for World War II finally brought down the unemployment rate.
To say the recession is over says nothing about how far we need to go before we can breathe easy again.
--Rex Nutting
A Dow Theory buy signal could be triggered as soon as the close of trading today, according to the interpretation of this particular follower of the Dow Theory, perhaps the oldest market timing system still in widespread use today.
16 min ago1:24 p.m. Sept. 20, 2010 | Comments: 9
- bobemakk | 10:33 a.m. Today10:33 a.m. Sept. 20, 2010
"We have launched Fantasy Earnings Trader, a free stock market game from MarketWatch. Have you joined? http://bit.ly/c84Lgm" 12:09 p.m. EDT, Sept. 20, 2010 from MarketWatch
"Ireland readies for crucial debt auction http://on.mktw.net/bSv3RS" 11:10 a.m. EDT, Sept. 20, 2010 from MarketWatch
"U.S. recession ended June 2009, NBER finds http://bit.ly/co9PFp" 10:32 a.m. EDT, Sept. 20, 2010 from MarketWatch
"U.S. officially emerged from recession in June 2009: NBER http://on.mktw.net/djSbGY" 9:36 a.m. EDT, Sept. 20, 2010 from MarketWatch
"Dow industrials extend rally 14 up 100 points http://on.mktw.net/8XimjH" 9:28 a.m. EDT, Sept. 20, 2010 from MarketWatch
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