By now you have heard that the Fed will discontinue its quantitative easing in October. Equities cratered on the news and are clawing their way back up to more realistic valuations.
Look for a stronger stock market when investors realize that the Fed has faith in this economy. Quality spreads (the high-yield bond index minus the yield on the ten-year note) will reflect this improved confidence. This spread increases during times of fear; wait for it to become more narrow before investing.
You can follow this data on the St. Louis Federal Reserve's free website.
http://research.stlouisfed.org/fred2/series/BAMLH0A0HYM2
Look for a stronger stock market when investors realize that the Fed has faith in this economy. Quality spreads (the high-yield bond index minus the yield on the ten-year note) will reflect this improved confidence. This spread increases during times of fear; wait for it to become more narrow before investing.
You can follow this data on the St. Louis Federal Reserve's free website.
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