IS THIS SUMMER 2010 RALLY REAL?

We have had a bit of a summer rally and July has been a good month for stocks. Profits have been good for many companies that announced this 2nd quarter earnings season and so the market has responded accordingly. But will this upward momentum be able to be sustained? Is this summer rally going to continue or die?

The fact is that the economy has not gotten any better. The unemployment rate is still around 9.5% and people are out of work in all demographics. Both personal debt and the countries debt is higher than ever and President Obama keeps throwing money he doesn't have at every problem that crops up. How long can this last and not have an effect on stocks?

The world's economy isn't doing much better as we have seen problems in Greece and elsewhere. Remember, any bad news from other countries now has an immediate affect on our US markets as this is truly a world economy. Our US companies do business everywhere and if something bad happens overseas, our market will go down as well.

The November elections are also right around the corner and there is going to be a lot of media coverage everywhere about that. People are upset and Obama's policies and the economy is going to get a lot of scrutiny which will expose some of the realities that people might have momentarily forgotten. I don't think any of this is going to be good for the stock market and for bolstering people's confidence in a continued rally.

All this adds up to my belief that this summer stock rally of 2010 could be about to be over. This Stock Market For Dummies blog believes we might be in for some tough times ahead and cash might be a good place to be. The stock market may have a little more upside to it but I think we will soon see a lot of ups and downs with perhaps more down days in the immediate future.