Decode the force that propel stock market.

There was an interesting article from Forbes about what makes stock market go up and down.

In short, the stock market and the herd investors only care about the expected cooperate earning because that's the only reason why market goes up. The market doesn't care about the economy as a whole.

Here are the clues you can pick up when cooperate earning are about to rise:

1. When the feb is starting increase interest. This usually means the feb has been making it cheap to borrow money from the banks; by pumping money into the economy businesses are expanding quickly and so is earning and inflation. The fed needs control inflation by hiking the interest.

2. When S&P 500 p/e falling. Which means the "e" the earning in the p/e formual is raising.

The chart illustrated similar pattern between s&p 500 and fed discount rate.
They go up together, down together.

This chart illustrated inverse relationship of S&P 500 p/e and S&P 500.

Final word: Interest rate will raise, and sp p/e is at the 2003 peak; evidence suggests bull market is coming soon.

Full story via Forbes