Most
of the time the U.S. stock market looks to 3 factors (call them the “pillars”
that support the stock market) to support its upward trend – let’s grade each
of the pillars. 

CONSUMER SPENDING:  I grade this factor a C- (below average).  This is a downgrade from the last report.  See more information under “The Economy”
below.

THE FED AND ITS POLICIES:  I continue to grade this factor an A+ (extremely favorable) because the
FED cannot do much more than it is doing to support the stock market and asset
prices.

BUSINESS PROFITABILITY:  I continue to grade this factor an A (very favorable).  With almost 90%
of the companies in the S&P 500 index having reported, the aggregate profit
growth in the fourth quarter was 9.3%, according to RBC Capital markets.  This performance continues to support a grade
of A.