Welcome to my latest video presentation for Mind Over Markets. The article below is a transcript that I’ve condensed for the sake of concision; my video provides additional details and several charts.

We’ve enjoyed a strong rally so far this year. The tech-heavy NASDAQ officially exited the bear market in early May. The S&P 500 passed that threshold last week.

Despite bullish conditions this year, many analysts have been consistently warning that the next shoe is about to drop. That hasn’t happened yet. Not even the banking crisis in March could derail the market’s rise.

Wall Street has been climbing a wall of worry all year; the worst fears haven’t materialized. The U.S. and other economies overseas have defied pessimistic expectations and posted surprisingly resilient growth, regardless of central bank tightening.

The S&P 500 last Thursday finally cleared the closing demarcation that marked a 20% rise from its October 2022 low, meeting the technical criteria for exiting a bear market. The index extended those gains on Friday.

If history is any guide, we can now look forward to big gains in the months ahead. During the first eight months of a new bull market, going back to 1932, the S&P 500 has posted an average gain of about 38%. Those gains were 54% in 2020 and 20% in 2022 (see my video for charts).

Yes, we’re in the midst of an economic slowdown that is expected to become an outright recession. However, signs indicate that the recession will be short and shallow.

The anomalies of the COVID pandemic are largely behind us and supply chain woes are getting resolved. Inflation is cooling, jobs growth remains strong but not too hot, and the Federal Reserve is sending signals that it’s on the verge of a pause in its tightening cycle.

Investors are optimistic, with U.S. and overseas stocks ending last week higher. In good news for inflation fighters, the price of crude oil last week fell 2.0%.

Despite additional production cuts announced on June 4 by OPEC+, oil prices have declined. It’s a remarkable development that reflects the diminishing clout of the oil cartel. It also shows that energy traders are more concerned right now about demand rather than supply.

Reports also are surfacing that Saudi Arabia, the de facto leader of the OPEC+ cartel, is feuding with its partner Russia. Apparently, Russia has been cheating on its quota because President Vladimir Putin desperately needs revenue to fuel his war machine in Ukraine. That’s further good news for the West in its fight against inflation.

It’s also worth noting that the CBOE Volatility Index (VIX), aka “fear index,” has been falling.

When the VIX surpasses 20, you can expect greater than normal volatility over the next 30 days, and vice versa. The VIX has pulled back below the significant demarcation of 20, to hover below 14. That’s a positive sign; a lower VIX means less fear and stress in the market.

Let’s also consider the S&P 500’s moving averages. It’s a clear bullish signal that the S&P 500 now sits well above all its major moving averages.

The week ahead…

This week’s economic calendar features three important events: the U.S. consumer price index (Tuesday); the U.S. producer price index and the Fed’s interest rate decision (Wednesday). If the CPI and PPI reports show that the rate of inflation is continuing to decline, and the Fed stands pat on interest rates, the new bull market is likely to pick up speed.

Start increasing your exposure to your “wish list” of growth stocks that previously seemed too risky. I also suggest you consider the advice of my colleague, Robert Rapier. As chief investment strategist of Rapier’s Income Accelerator, Robert has developed strategies that make money in bull or bear markets.

Robert Rapier can show you how to squeeze up to 18 times more income out of dividend stocks, with just a few minutes of “work” each week. Click here for details.

John Persinos is the editorial director of Investing Daily.

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