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We have seen the S&P500 toggle around the 2100 level for over a year.As an economist, I call this a ‘stable’ stock market.One day, or period of days, the major indexes fall apart.
Then, the optimism on a forward look returns, and the major indexes rise back towards 2100.How long can this last?Frankly, this can last for a long time heading into 2016.The reason is that the weakness in the oil and materials markets impacts more than just the stocks in those sectors.It adds a layer of uncertainty to the entire risk spectrum of financial instruments.And once there is worry about risk, the upside to ‘animal spirits’ needed for a new leg up falls off.
