What's going on?

Stocks have�continued their sharp rebound this week � and one of the leading sectors is �consumer discretionary� (e.g. stuff that people can buy, but don�t have to). Two such stocks soared higher on Wednesday as they released positive financial results: Priceline and Garmin.

What does this mean?

Priceline is an online travel bookings company (it owns Kayak and is a competitor of Expedia). They cited lower oil costs as one major reason that travel bookings were on the rise (both because it makes holidays cheaper and because people have more disposable income). That�s a direct example of how lower oil prices impact people spending money on other things.

Garmin is a provider of GPS products and, in recent years, has focused on fitness and outdoor activities (similar to a Fitbit). It reported better results than expected and gave fairly upbeat guidance to investors for the rest of this year citing, among other things, strong demand for its fitness devices.

Why should I care?

For stocks: Investors are regaining belief in the US consumer. Stocks of �consumer discretionary� companies are performing better than the overall market. Retail stocks are actually doing particularly well in this rebound � that�s ahead of financial results from big retailers such as Wal-Mart and Nordstroms tomorrow. Investors are, perhaps, starting to regain confidence that the US consumer will be able to power through all the weakness experienced thus far this year – and that is important because, as we reported�, economic growth is heavily reliant on the consumer.

The bigger picture: Stocks are now up more than 6% and 8% in the US and Europe, respectively, since their lows. Remember when we said how difficult it was to predict a bottom? One reason is that stocks, typically, bounce back very sharply, very quickly. The question now is over the quality of this rally: will it move sustainably higher or is this just a �bear market� rally (a.k.a. a temporary rebound in an otherwise downward-trending market).