Are we already trading on 3rd and 4th quarter expected increase in earnings? From my perch I see no good signs for the economy yet the market seems oblivious.
most of the horrible scenarios are already priced in. so when MBI and ABK lose their AAA rating the market will probably get a good sell off but that will just end up being a buying op.
I recently started putting a few longer term chips back on the table when a variety of the bullish percent charts I use turned up. They have served me well for many years, and you gotta dance with the one that brung ya. http://stockcharts.com/def/servlet/SC.pnf?c=$BPSPX,P http://stockcharts.com/def/servlet/SC.pnf?c=$BPNYA,P http://stockcharts.com/def/servlet/SC.pnf?c=$BPNDX,P
The market is a discounting mechanism. It looks roughly 6 months ahead. Just look at Bank of American or Lehman Brothers . . . They are already 20% of their lows. By the time you see the "all-clear" sign from your economic perch, you will have missed some MAJOR moves. Forget about trying to figure out where the economy is . . . look at the stock charts using some basic technical analysis. Do your own homework. Don't ask others to do it for you. Otherwise, you will never be able to develop your very OWN methodology.
Technically, some sectors (financials, housing) are breaking their previous highs. A retracement downward and bouncing off a higher low signals a reversal of the downtrend.
I have done mine... We are not even close to being out of the woods. In fact we haven't even made a 50% retracement in the markets since the sell-off. I don't think it should surprise anyone to see this bear market rally. The bottom _might_ have been put in, but we will know when it's tested. Has there EVER been a V shaped bottom in a bear market?