The market has gained some momentum as the S&P500 has been up for seven straight days. There is a feeling that a military strike against Syria may be averted. The expectation that a vote by Congress for an attack on Syria would likely fail and, news that an alternative solution has emerged has reduced immediate concern. Also there has been encouraging economic data out of China that, if accurate, could be a sign that the world economy may be improving.
Geopolitical concerns have driven the market over the last month or so. However, we continue to believe the market, though not in a straight line, is poised to move higher based on the fundamentals of price to earnings, cash flow, book value and sales. There also continues to be an unprecedented amount of sideline cash and the recent rise in the ten year Treasury rate may create additional fuel to support our bullish stance for the equity market.
Evidence that investor sentiment is improving is shown by the outperformance of the growth sectors over the traditional defensive dividend stock industries lately. A higher level of confidence has been the only thing missing for the market to achieve much higher prices over time in our opinion.