Data Reading

Determining just what we have here when reviewing the strength and weakness of the current stock index levels can lead to tricky conclusions. Is the worst over? Is this a new bull phase? New lows? The bulls and bears are raising proofs to convince themselves and everyone else.

Misreading market information, the pace of economic rise or decline is easily done. Making assumptions about today's data measures for housing, exports, and economic growth are difficult because of the magnitude of the price breaks. Foreclosure deals are getting as much attention as the flip em frenzy. An old pit adage is never buy the first rally, and foreclosure deals may fit there.

What will allow the markets to establish a long upward trend after such a large decline? China is once again being pointed to as the deliverer. Of coarse you then have to rely on a totalitarian economy pumping money to save itself and believing the economic data being generated by the Chinese government. Sounds as convincing as the AAA credit ratings of the sub-prime era.

Fixing Up

Putting the stock indexes on the upside track is a combination of public trust and a mountain of interventionist theories speculating what underlying share values may be able to support. The former remains unwilling to risk anything more than some of what is left, and the latter, financial engineers, are trying to determine how and what the post crash world order will trade. Arguments about the type of recovery, V, L, or W, all are based on the notion the markets have already bottomed. There are few who think substantial new lows are ahead. Given the headlines and analysis of the crash, the investigations and interventions, a smoke clearing vista of rebuilding has become wisdom.

These markets still remain fragile and the prices constructed so far off the lows show no particular strength. Extremely cheap price areas are usually rejected by rapid recovery rallies and the stop watch on this rally is getting close to losing in the qualifying time. While a middle of the pack recovery would suit everyone, a race down is still a possibility.

Trail Of Rally

After a decent gain last week, the indexes this week start with some rally fatigue. The weekly actions have remained supported by lack of selling and pricing from the money sloshing around from the various bailout strategies. Underlying internals remain soft and may lead to the ' eat like a bird, shit like an elephant' syndrome known to markets which chip higher weekly only to give a major portion of the entire rally back in a two or three day period. Remember, money rates essentially at zero reflect the real story about overall economic energy. That said, the indexes will still set up to recover half the losses from the 07 highs, which for the DJIA will be just over 10,000.

Buy This

Pricing continues to creep into the market as major market players apply investment dollars where sellers are few. The great bail out has provided more than enough currency for trading as historic price declines may have created buy and hold opportunities. Using the metrics for measuring value over the last 25 years this would be the case, but there may be new standard for understanding asset values which will only be born out over the next several years. Just in case, the rallies of this spring have had less punch to them when compared with the days of the bull. While there is no question the pros hope to sell these purchases higher to the same public dopes they did for years, the weary masses may let the greater fool theory be applied amongst the institutional and proprietary chumps this time.