we reached all time highs in the major US indices last year based on super inflated housing prices which in turn made the average US consumer much richer. those housing prices have crashed, the consumer is insanely in debt, w out the ability to borrow due to credit crunch and worse rates for those who can borrow. on top of that we're in a recession, and there are large amounts of layoffs in addition to rising inflation. so, your thesis is we're going to go even higher in the indices now? ok, makes sense
Markets bottom on bad news. Bears were given a sharp stick in the eye both last Monday and this Tuesday. How have they responded? By sticking their tail between their legs and watching the gains hold while they drone on about how fundamentally bad things are out there.
I don't think we're anywhere close to a significant leg up without breaking through 1400 in the SP500. All this basing here is all good and well, but without breaking out of this range it's hard to get too optimistic here.
Markets move before the fundamentals are apparent. If you haven't figured that out by now, you may as well watch CNBC or read the financial pages for guidance. This market is building a space station. It will top in 2009 after the election is over.
My 2 cents, The bears essentially gave up today, but, this is by no means, at least in my opinion, the prelude to a new bull market on stocks. We actually needed the incredible amount of short interest to go away , before we can put some serious devaluation into stocks. Being a wave bug myself, i suspect a top around 1420-1430. This would get almost everyone bullish again, and pave the way for both vix and cpc to show alot of complacency, kinda like late december. I actually thought the top had been achieved yesterday, and today i had to hedge my positions ... but the good trade is still being prepared ( the trend, remember .... not some abc dead cat correction ) ... sort of a may-april 2001 reprise Disclaimer: I took short positions yesterday on 3 stock indexes and hedged them out today, so what i say may be tainted by these directional bets.