A key sign for the stock market is consumer optimism.
And according to a recent survey by the University of Michigan, the highest number of Americans in 27 years believe now is the time to make big-ticket purchases.
It doesn’t really matter why consumers feel this way. It could be because of inflation reports, or worries about discounts fading amidst trade wars. In any case, the jump in demand for big-ticket items will be a boost for the stock market.
In March, 21% of Americans who were surveyed say it’s better to make big-ticket purchases on items like appliances and electronics right now.
This is the highest amount in 27 years.
It speaks to consumer optimism. You can see on the chart, in 2002 to 2003, investors didn’t think it was a good time to buy these items. And in 2008 and 2009, it wasn’t a good time either.
Those years are the two extreme lows in the stock market over the last two decades.
And the last peaks in optimism, 2000 and 2006, came as the stock market entered a euphoric stage just before a crash.
That is the area of the market I believe we are now entering — the euphoric stage.
It’s going to lead to massive gains over the next year or two, only to be followed by another stock market crash.
Chad Shoop, CMT
Editor, Automatic Profits Alert