I posed the following question a few days ago: “Does the stock market rally have legs?” We have now had 4 days in a row of a higher market, something we have not seen since June this year. This is also the S&P 500 Index’s biggest 4-day surge (+18.0%) since 1933.

A sharply weaker opening on Wednesday after a barrage of gloomy economic reports was followed by a reversal on news of former Fed Chairman Paul Volcker’s appointment to a new White House Economic Recovery Advisory Board tasked to revive growth in the US. Involving the 81-year Volcker in this way is a smart move by President-Elect Obama.

The table below shows the performances of various global stock markets over the past 4 trading days, as well as figures since the respective markets’ highs and for the year to date (all in local currency terms).



The gains of the various US stock market sectors since the November 20th lows make for interesting reading, with previous laggards such as financials, consumer discretionary, energy and materials showing the defensive sectors (health care, utilities and consumer staples) a clean pair of heels.


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Interestingly, according to Bloomberg, Société Générale global equity strategist James Montier said he’s never been so bullish after the financial crisis dragged down prices of stocks, corporate bonds and inflation-protected government debt:

“This is a value investor’s version of heaven. From a bottom-up perspective, the equity market is offering some excellent companies at truly bargain prices for those with the fortitude to shut their eyes, or at least switch off their screens and buy.

“With all of these opportunities available I have never been more bullish! Will I be early? Almost certainly yes, but if I can find assets with attractive returns and I have a long time horizon I would be mad to turn them down.”