Normalization

Normalization is an economic effect (not necessarily a term) that describes in any supply-demand economy, when the economy is not in equilibrium will generally aim to return to equilibrium. Various economic models explain how markets vs government should create this return to equilibrium. In the United States, capitalism generally leads towards a market based economy with minimal government intervention. How one defines “minimal” is all relative but the Obama administration would argue that the amount of bailout is not 100% but enough for the road to recovery. The point is this, the economy is on the way to recovery and equilibrium but the market will get there. Two examples would be that the banks are preparing to return the bailout money and that the market reached the 10,000 level and has remained in the vicinity.

Surge

Based on the optimistic forecast by major Dow components, the market surged to close at about 10,200 points. The Group of 20 said that they would be keeping at par with the economy, which in these times is a decent enough prediction, but probably not enough good news for some. At this time though, mental factors can help more so than actual results but we need to stay away from emotional decisions which have repeatedly proven to have disastrous results (i.e. tech bubble and housing growth to name the most recent factors).

 

http://money.cnn.com/2009/11/09/markets/markets_newyork/index.htm