Stocks built on the rally with another net gain last week, ending the week with the S&P 500 Index up 46% from this year’s low point. In fact, July was the best month for the Dow Jones Industrial Average since October 2002—the end of the last bear market. On Thursday, the S&P 500 index came just a few points shy of 1,000 during the day—the highest level on the index since November of last year. On Friday, second quarter GDP was reported to have been down just 1%, compared to the 5-6% declines in the prior two quarters, showing us that the recession has faded quickly and a recovery in the economy is now at hand. .

Market participants were pricing in another Great Depression early this year as stocks fell an additional 25% from the start of the year to the low point on March 9. Then stocks rallied nearly 40% over the two months following the low point as the markets began to reflect expectations of a mere recession rather than a depression…

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