The ONE Number That Predicts a Bull or Bear Market

*Originally published on StreetAuthority.com and re-published with permission.

By David Sterman

After surging for nearly two years, the stock market appears to have reached a plateau. Every time the S&P 500 makes a move to surpass its two-year high of 1,370, it falters anew. Whether it can finally breach that mark and move up another 20% or 30% will be decided by just one number: Gross Domestic Product (GDP) , a broad measure of the size of the U.S. economy.

Although many investors believe the market will rise if the economy  is growing and sink if it’s shrinking, this is the wrong way to think about it. Instead, the real focus should be on whether the economy is growing at a slow pace or a moderate pace. Indeed, with 2% growth, the stock market could steadily fall. Yet with 3% GDP  growth, the market could surge. The difference between 2% and 3% may not seem like much, but it is.

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