Welcome to my video presentation, in which I analyze the latest financial, economic, and political trends, and how they affect investors. Below is a condensed transcript; my video contains additional details and several charts.

Technical traders cheered the S&P 500’s close of 4,280.15 last Friday. That’s because a close above 4,231 meant the benchmark had recovered (or retraced) 50% of its decline from a January 3 record finish at 4796.56.

History tells us why Friday’s closing number is an important threshold: Since 1950, there has never been a bear market rally that surpassed the 50% retracement and then gone on to make new cycle lows.

The bear market isn’t dead…yet. We’re still officially in bear territory. A bear market ends when the index reaches its low before going on to set a new high.

But perhaps that faint sound you hear, off in the distance, is the death knell for the bear. The lows are starting to get higher, and the highs are starting to get higher.

Stocks certainly had a good week. Gains for the week of August 8-12 were as follows: the Dow Jones Industrial Average +2.9%; the S&P 500 +3.3%; the NASDAQ +3.1%; and the international MSCI EAFE +2.4%.

A bevy of positive data last week on jobs, inflation, and consumer sentiment buoyed Wall Street, by suggesting that the Federal Reserve might soon get less hawkish. As of market close Friday, August 12, the S&P 500 was 16% higher than its low point in June.

Crude oil prices gained ground for the week, with a gain of 3.2%, but over the past month, oil has fallen as traders predict that slowing economic growth will weigh on energy demand. The oil price rally has lost steam this summer, with oil falling below $100 per barrel. Also pushing down the price of oil have been unexpectedly high inventory builds.

Commodity and energy prices have been falling, which has generated better news on inflation, which in turn has driven the stock market higher. Over the long haul, commodity prices will probably resume their upward trajectory and remain elevated, due to rapid development in emerging markets and the electrification of global economies. But right now, we’re getting much-needed short-term relief.

The falling price of oil has been great news for consumers, who are feeling less pain at the pump. The average retail price of gasoline in the U.S. has dramatically fallen and, as of this writing, hovers at $3.95 per gallon.

I’ve noticed that the press has given less attention to gas prices now that they’re falling, as compared to the hysterical coverage given to gas prices when they were rising. As an investor, always be aware of the media’s “negative bias.”

Green energy gets a lift…

In addition to the CHIPS act, which seeks to boost the U.S. semiconductor industry, we also saw passage of the Inflation Reduction Act. The bill is smaller in scale than the proposed 2021 human infrastructure bill, but it’s a miracle that anything got passed in the toxic halls of Congress.

The Inflation Reduction Act makes a down payment on deficit reduction to fight inflation, invests in domestic energy production and manufacturing, and encourages deployment of green energy, such as electric vehicles, to reduce carbon emissions by roughly 40% by 2030.

The bill will also allow Medicare to negotiate for prescription drug prices and extend the expanded Affordable Care Act program for three years, through 2025.

The bill closes “loopholes” used by the wealthy, by imposing a 15% corporate minimum tax, a 1% fee on stock buybacks, and enhanced IRS enforcement.

In provisions heartily endorsed by the automobile manufacturing industry, the bill implements clean energy tax credits, including those to encourage EV purchases and the use of green sources of electricity and energy storage. The bill offers consumers a tax credit of $7,500 for new EVs and $4,000 for used EVs, to make these vehicles more affordable.

The week ahead…

On Monday and Tuesday, keep your eye on reports related to housing, which is a bellwether sector. Weakness in housing is often interpreted as a leading indicator of economic woes to come.

On Wednesday, the main events will be retail sales and release of the minutes of the most recent meeting of the Federal Open Market Committee (FOMC). Stocks would probably surge, if retail sales come in strong, or if it’s revealed that at their last meeting in July, FOMC officials suggested that a pivot is on the way.

The next big data release will be on Thursday, with initial jobless claims and existing home sales. The betting on Wall Street is that we’ll get yet another strong reading from the jobs market.

I expect the stock market rally to maintain its momentum for the rest of this year, but it won’t be in a straight line. Don’t forget, the November midterm elections are fast approaching. The political squabbling could get so ugly, it roils markets.

I continue to recommend an emphasis on value and defensive plays, but now’s probably a good time to dip your toes in the water with the growth stocks that have been on your shopping list.

Consider beaten-down technology stocks. A rally since mid-June has boosted the NASDAQ by 23%. Yet the tech-heavy index is still down by more than 18% so far this year. In my view, that’s a buy signal for bargain hunters.

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John Persinos is the editorial director of Investing Daily.

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