The stock market trend is the average price for the past twelve months which is also called the one year average. The cliche' in stock market talk is the "trend is your friend". By following the average price of the market is how investors know if it is going north or south.
When the market is at a one year low, this means the value in your retirements funds have made no money. This is the first step that the economy and mutual funds in a IRA and 401K are going down. It also means you should be transferring to money market funds until the bear market and recession is over.
There is no secret or mathematical equation to predict the stock market. The best way is to use common sense on how the market has performed in the past. The answer lies in the S&P 500 Index chart. The chart tells you when stocks and the economy are performing below normal. The key is to set the chart on month to month instead of day day. This will eliminate the fluctuations in price which makes straight lines over the long term.
The S&P 500 Index is known as the benchmark for the over all market and is referred to as "the stock market". This index consist of the 500 biggest companies in the world and their stock price rise and fall depending on the revenue they generate. It is no secret that this index and the economy follow one another. Other indexes like the Dow Jones and Nasdaq mimic the direction of the S&P 500.
With a recession currently going on in the economy and the gross domestic product (GDP) being negative for one year now, the stock market is a long way from a bull market. The GDP measures all the services and goods sold and bought in the U.S. Unemployment is at a 26 year high at 9.5%.
From January 1st until now, the market is up 6%, This is the first positive sign that the economy is starting to stabilize. The year ago percentage rate for the market is still down a negative 22%. The long term direction of the market will not be clear for another five months. The stock market will have to be above the same price it was one year ago to know if the recession is over.
