By Eric Linser As we wrapped up the summer season with Labor Day weekend, white pants and seersucker suits get put back in the closet. Here in the Bay Area, that means it's kick-off to football season and the final push for the San Francisco Giants and the Oakland A's to go deep in post-season play. I hope everyone had an enjoyable summer, and for those in California we have a few more months of nice weather ahead. Similarly, the outlook for the markets is pretty much that: better days ahead. Before looking ahead, let's take a look at what the summer doldrums presented us. (The chart below shows stock market performance from Memorial Day to Labor Day.) It's been like a shuffle - a step forward, a half-step back, two steps to the right, and repeat.
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Stealth Bull Market
As we started the month of August, the S&P 500 Index fell quickly. It was anything but certain what the month would hold. But things turned around on a dime, leading US stocks on their biggest one month gain since February. The S&P 500 Index (SPX) advanced in August to above 2,000 for the first time and pushing the Dow Jones Industrial Average back above 17,000. Earlier in August, the Dow was negative for the year, after previously hitting an all-time high in July. Small companies fared worse, but have rebounded nicely. With market indices hitting new highs, you'd think there'd be a more celebratory tone to the market. However, in my opinion, it's more like a stealth bull market that no one believes in, portending more upside ahead. The rationale for the rebound? Of course more buyers than sellers. As markets have stabilized from frothy July gyrations, investors appear to be recommitting to stocks. We continue to see tangible evidence of economic acceleration in the US, confirming that the second half of the year should be stronger than the first.