Will recession be over this summer? If you think the expansion is coming and the business cycle is turning, where should you put some of your money to work?

The recession we are in should end this summer, so states the Economic Cycle Research Institute (ECRI). Based on their US Weekly Leading Indicator, things are looking up and going up. Improvement in the economy points to an end of the recession by summer. This indicator leads business cycles and is coming off of a December 2008 low and rising thru the week of May 1. Inflation appears tame in the US and around the world. In fact, a slight degree of disinflation has been observed over the last year. This is good news for the markets as bull markets can rise and roar is this scenario. Lakshman Achuthan of ECRI expects a late year recovery in the stock market.

The stock market is up about 6% this week as measured by the S&P 500. Emerging markets are improving as well. The other major foreign markets are up even more than the US markets over the last several months.

In an early expansion and change in a business cycle, the place to be in early is the small cap growth stocks. This group makes the fastest and earliest moves as the business cycle turns. Later, as it matures the larger cap stocks move up. Fast moves occur as most bear markets are followed by V shaped recoveries. This is what ECRI predicts. Market watchers know that the faster the Dow falls, the quicker it climbs back up.

So, if we think the recovery is coming what do we do? Small cap growth as a stock class is one idea. What about some sectors to consider. The commodities are the first to come to mind. When economies start to grow again oil, copper, grains and essentially all agricultural products on will be onboard. Gold will come on later in the cycle. One can look to buy the commodity or the stock of the company that produces it. Both are good bets. Gold, oil and copper are up recently. Energy experts think oil will not go beyond $60 a barrel for a while. Investors are buying gold is moving as an inflation and safety hedge.

There are many ETFs and ETNs that one can use now to buy the commodities and stocks of companies producing them. If you buy now and are early, you can wait. Things are relatively cheap now. Look at oil. Gold see saws. You can wait to buy it after a fall back if you want it. The grains and so on are also cheap. You just have to decide if this is the time you want to get in and into what.