Economic Recovery Cycle?

You won't need the Fed to tell you that things are getting better if you have been following economic numbers (or my blog) yourself. The Dow closed up by over 109 points today in a late day fight back by the bulls. It was a tough fight today as the bears almost tipped the scale in the afternoon.

More and more I am led to believe that this may be the start of an economic recovery. If the numbers are recovering and the Fed is talking about recovery on TV, then the recovery could already have taken place some time back (just that it wasn't apparent). The Empire State Index (see stock market calendar) turned in way better than expected today, in fact, the best since mid last year. Even though the Empire State Index has a relatively short history compared with tomorrow's Philly Fed survey, it still is a closely watched leading indicator for the ISM index. The ISM index has also gradually recovered for 3 straight months already. If tomorrow's Philly Fed survey turns in better than expected, we could see a very positive reaction to it.

So, does it mean that the stock market is going up up and away? Again, stock market does not move in the exact same way as the economic numbers do. So far, the Dow has been in a congestion along the 8000 points resistance level for 2 weeks now. If it does not find the strength to break this level soon, we might see the pullback that I have been talking about this whole week. No matter what, the pullback is going to happen and until it happen, there is no way to tell for sure if this is a bullish reversal or just a very extended relieve rally.