A Few Reasons That The Market Might Rally

A Few Reasons That The Market Might Rally
In a typical market environment, investors will use hard reasoning and logic to back their decision making on which equities to buy and where to deploy capital. However, the market that we are currently in is anything but typical. With psychology playing such a large part in the market, many decisions are being made depending on whether you have a optimistic or pessimistic view of the markets. The optimists are having a difficult time finding news and information that backs their point of view. But the overall market is still on their side as the both the Dow and SPY are consolidating at recent highs. The Pessimists on the other hand have bad news coming out daily in the both the United States economy and the global economies.  But the market still has yet to show any significant downward move.  Here a few tips on  how to profit from a market rally:
A Strong Budget and Debt Reduction From Congress
One thing that could put the economy back on track would for a solid budget to be planned out in Congress. Although you wont see an immediate reaction from the markets, a strong budget would have a very good long term effect on our economy. The United States has currently $15 trillion worth of national debt, with about $3-$4 trillion of that needing to be cut. The difficulty lies in the finding a perfect balance of cutting costs while keeping the economy from slowing down.
Aggressive Austerity Measures and Reform In Europe
Another factor that could rally the market would be if reform and austerity measures were established in the European Union. With Greece and Italy taking on new governments, both are looking to take steps in the right direction and fix their problems. This is easier said then done and is evident in the political games that have plagued the area for the past eighteen months. But like any political game, waiting to the last minute to use up every last bit of leverage, and then at the last second coming to terms, is what you should expect. So look for volatility to increase as the political warfare heats up and hard terms will need to be agreed to. But once the bailouts and austerity measures are passed, look for the markets to react positively and look towards longer term growth in the area.
More Quantitative Easing and Help From The Federal Reserve
The Fed has shown that they have the power and are willing to do whatever it takes to keep the stock market stable. The two rounds of quantitative easing which helped stocks stabilize and recover during the 2008 crash, were a necessity and something that would could see again in the future. The Federal reserve will also keep interest rates at all time lows, trying to spur borrowing and growth of the real estate markets. Low interest rates will allow home owners who are underwater to refinance a lower rate and save some cash extra cash each month. Low interest rates will also make homes more affordable for new home buyers, hopefully reducing the amount of inventory currently on the market.