I do not see any reason to be bullish right now. This is what concerns me: - Budget deficit *Increased taxes and spending cuts will enact contractionary forces. - The housing market is shit and its recovery has stalled. *Risk of housing crisis, round 2. - End of QE2 * Highly doubt there will be a QE3 with inflation worries. - Europe situation is terrible *Stronger dollar? - Market has been on a tear (up almost 30% since September) * Correction seems imminent - Signs of economic recovery are dwindling.
The obvious reason to be bullish US equities are: 1) the market is going up 2) the potential for a weak dollar if capital utilization picks up before the fed contracts the money supply.
Not necessarily. QE-2 is not popular with the population due to inflation (food and gas prices) as the value of their homes dwindling. Politics does play a role. The parlor trick known as QE-3 IF implemented, will probably be just in time for the 2012 elections (with the public clamoring for ANOTHER stimulus). ------------------------------------------------------------------------------ As for Mister Market, SPY, proxy for the market, just hit a 20 day low and its Bollinger width is the lowest/tightest in 6 months. Time for some range expansion. In other words, more to come. We'll see IF a 55 day low ($125.28) holds as support. Ditto for the number of 52wk NYSE new lows exceeding 40. Irrespective of QE-2, summer's approaching. Just as it does every year. Don't expect much to positive until just before (of just after) the 4th of July.