Last week I said that I expect this rally to go right into January. I based that statement on my faith in "The Presidential" cycle. It is an extremely powerful phenomenon and has produced magnificent results over many years. Yet, I wonder. The current president in office appears unable to help stimulate the economy and create jobs. That's what the Presidential cycle is all about. So will it work this time?

I think so, but not to worry. There is another powerful force to consider: corporate earnings. Bull markets exist as long as corporate earnings are rising. This vital information is shown in the VectorVest "Truth Chart," which was first described in my essay of March 21, 2003 and expanded upon in my essay of March 28, 2003. Happily, the current direction of corporate earnings, as shown in the "Climate" section of these Views, is up. So what's to worry about?

Just read the news. It seems like the economy is going to hell in a hand basket. The U.S. dollar is falling like a rock. Home re-sales are miserable. Foreclosures are sky-rocketing. Consumers are gloomy. Auto sales are weak. Retail sales are slowing down. Murders and robberies are on the rise, and Santa may not show up this year. So there's plenty to worry about.

Forget about all that stuff and concentrate on what's important: corporate earnings, inflation and interest rates. These are the critical factors to deal with, and the news is good, very good. Our current Investment Climate report, shown below, says that earnings are trending higher, and inflation and interest rates are trending lower. That's as good as it gets.

Yes, I know the bull-run has lasted a long time and a number of smart guys, including Sir Dr. Alan Greenspan, are saying a recession that would end the bull market is quite likely. Sure, that's possible, so I'm taking it one day at a time. As long as corporate earnings are rising, I'll be OK. I watch corporate earnings. They're the key, The Bottom Line.

P.S. If you are not familiar with our Investment Climate Indicators, please be aware that anything above 1.00 is favorable, anything below 1.00 is unfavorable. For example: Interest yields on 10-Year AAA Corporate Bonds have been going up. That's bad for stock prices, so its indicator is below 1.00. S&P Earnings are rising. That's good for stock prices. So its trend indicator is above 1.00. When it goes below 1.00, the Bull market will be over. Fortunately, it moves quite slowly.