Here’s another factor of support for a stock market rally: wages are rising. I am using Elliott’s model for predicting bear and bull markets based on the leading indicator: changes in the RATE OF CHANGE in PCE, which is led by WAGES. With wages starting to go up, consumer spending ought to get a nice bounce.

Now the only question is, how much will the housing slowdown and high oil prices affect the consumer pocketbook and work against the #1 predictor of earnings per share (which is real wages).

Does anyone have any data for stock markets rallying in the face of declining earnings? I am certainly interested in a possible rally this fall, as I want to up my 5.5% return. Historically, there has been huge rallies buying into the mid-term presidential election years. Buying at that time and holding for 1 year gets 20-50% returns.