In our Bear market rally interuptus, we have come a long way, up nearly 50%, let that sink in and realize prices are near where they were in 1998, the BEST investment over this time period? GOLD , so stocks for the long term? what is your horizon? are we in SECULAR BEAR? sure seems so to me.
There are valid economic uptick indicators to be sure, but they do not exist without CRUTCH of government and FED life support. Already traffic to dealerships and even those going to EDmonds to investigate a new car are down, we bought ourselves a blip. One in 4 who bought now worry about new debt incurred, GEE we are suffering from debt overload, and what does gov do? goose consumption and debt?
There is marked increase in tech spending, maybe helps productivity down the road, it may also make it harder for those seeking work.
Home prices are off some 30% yet most banks carry mortgages at 90% of face value.
Stocks are pricing in a GDP of around 4%, but if hiring doesn't pick up we will have about 4 million consumers consuming less. Unemployment reports still show levels near 570K per week....this needs to drop below 500K.
Stock by historic standards are extremely expensive showing only a 2.7% yield SPX 500.
IMHO stocks would look MORE appealing around 700-850. I think this sideways action into end of August is also reason for caution, LOW VOLUME has plagued this rally almost since inception, NEW HIGHS have been waning, not what you expect from NEW BULL MKT.
My charts show the V bounce we have so far without ANY TEST of the lows.....I think its needed.
D
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