The causes and characteristics of rallies vary, but most financial theorists agree that economic cycles and investor sentiment both play a role in the creation and momentum of rallies. In general, information about a strong or strengthening economy, indicated by high employment, high disposable income, low inflation and high business profits usually ushers in a rally. The existence of several new trading highs for well-known companies also indicates a rally is occurring. It is important to note that government involvement affects rallies: Changing the federal funds rate or tax rates indirectly encourages economic expansion or contraction.
Rallying is a very popular sport at the "grass roots" of motorsport—that is, motor clubs. Individuals interested in becoming involved in rallying are encouraged to join their local automotive clubs. Club rallies (e.g. road rallies or regularity rallies) are usually run on public roads with an emphasis on navigation and teamwork. These skills are important fundamentals required for anyone who wishes to progress to higher-level events. (See Categories of rallies.) Short special stage practice events on public roads are in some countries organized by the local clubs, with a permission of the local police, the community normally using the road, and the road authority. The public road is closed during these by the organisers or the police.
In Africa, 1950 saw the first French-run Méditerranée-le Cap, a 10,000-mile (16,000 km) rally from the Mediterranean to South Africa; it was run on and off until 1961, when the new political situation hastened its demise.[51] In 1953 East Africa saw the demanding Coronation Safari, which went on to become the Safari Rally and a World Championship round,[52] to be followed in due course by the Rallye du Maroc and the Rallye Côte d'Ivoire. Australia's Redex Round Australia Trial also dates from 1953, although this remained isolated from the rest of the rallying world.[53]
Rising investor confidence also indicates a rally, and it is perhaps more powerful than any economic indicator because when investors believe something is going to happen (a rally, for example), they tend to take action (purchasing shares in order to profit from expected price increases) that actually turn expectations into reality. Although it is an objective concept, investor sentiment shows through in mathematical measurements such as the put/call ratio, the advance/decline line, IPO activity, and the amount of outstanding margin debt.
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