I like to think that when life beats you down to the point where you can't take any more, there's some good thing right around the corner that will get you going again. I found that was true when I met my girlfriend last summer, when I went to the most amazing vacation of my life this past May, and when I had my hot chocolate this morning.
This morning, consumer showed just how beaten down they feel, as the Conference Board reported that its Consumer Confidence Index dropped to a record low of 38 in October, a whopping 38% decline from September.
Now what does this mean for stocks?
According to Ken Fisher:
"We find that high consumer confidence is generally followed by low returns. There are statistically significant relationships between some components of consumer confidence and subsequent Nasdaq and small cap stock returns. But the relationship between consumer confidence and subsequent S&P 500 returns is not statistically significant."The data isn't terribly conclusive, but I find myself becoming more positive on stocks as a result of the awful Consumer Confidence reading, especially since major stock market lows occurred near major lows in Consumer Confidence. You want to buy when sentiment is very negative, and we're at that point. The economy isn't likely to improve anytime soon, but that doesn't mean we can't get a significant bounce. I'm not in "throw money at the market" mode just yet I'm seeing a number of covered call trades that look fairly attractive.
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