Stocks Will Rebound

The stock market fell hard after the election.  Several reasons have been given for the downturn, but it probably will not last.  For example, the looming budget crisis was one reason that pundits gave for falling stock prices.  We had this same situation in August of 2011, and Congress eventually compromised.  I believe Congress and the President will agree on a solution once again, and stocks will move higher.

We just completed an uptrend cycle that ran from July to October.  Stocks have already pulled back almost to the 50% Fibonacci retracement for this trend.  As long as the Federal Reserve is willing to prop up the economy, I believe buyers will soon look for bargains at the current level or slightly lower.

Another reason for a stock rebound is that the economy is still slowly recovering.  Unemployment is staying about the same, manufacturing is not plunging, and home-building is looking up.  So, it makes sense to keep some money in stocks for the usual fall and winter rally.  You could also diversify into bond funds and get paid for waiting.