To understand the possible direction of the stock market, Netflix is instructive.
The movie-streaming company’s stock bounces up and down crazily on the news-and-speculation-o’-the-moment, while always ending up moving up and to the right. That lesson we learned yesterday, as better-than-expected fourth-quarter results pushed up its shares by 17%.
The broader stock market really isn’t much different. Three times since last April, the market dipped 4% or more over the course of a few weeks, accompanied each time by hand-wringing over everything from Ukraine to Ebola, and whether this really, really was the end of the bull market and the onset of a correction or, worse, a bear market. Much the same happened in 2013, prompting no less than Bank of America Merrill Lynch’s BAC, +2.43% technical analysts to predict a 20% drop. And each time the curve went up and to the right, as the S&P 500 Index rose more than 45% over the past two years.
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