Does Hope Float the Market?

US Markets finished positive today to end the best week of 2012.

US markets and ETFs finished positively today to end the best week of 2012.  The SPDR S&P 500 ETF (NYSEARCA:SPY) closed .80% up, while the SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) rose .73%.  The PowerShares QQQ Trust Series 1 ETF (NASDAQ:QQQ) rose .96%, while the iShares Russell 2000 Index ETF (NYSEARCA:IWM) finished up 1.36%.  All in all, the DJIA rose 3.6%, the S&P rose 3.7%, and the NASDAQ rose 4% to close off an excellent week for markets.

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So are investors really hopefull about a positive resolution of the European mess, or was this week’s rally a mere correction?  Likely a mix of both, as European affairs stalled out last week after Greece postponed elections until later this month.  I do wonder how long positive European sentiment will last so long as Greece, Spain, Portugal, and Italy remain on the hot seat.  Keep in mind that the European Central Bank simply does not have enough cash to bail out a defaulted Greece; imagine the catastrophic effects of a defaulted Spain or Italy?

Bottom Line: Hope appeared to be the answer for US markets, as this week marked the best week for 2012, a particularly impressive gain considering the downfalls that met us earlier in April and May.  Alas, this rally might be a correction, as many negative forces are still on the horizon

John Nyaradi is the author of The ETF Investing Premium Newsletter.