http://www.contraryinvestor.com/moprinter.htm May commentary

When there isn't much to say I take a break, so let's catch up.

In a "floating on a sea of liquidity" and 8,000 hedge funds kind of market, it is not surprising to see a new high for move in Dow, and maybe all time high being less than 2% away, will follow......but all is NOT healthy.

As this rally goes into its 44th month from 2002/2003 lows, it becomes ever more LESS inclusive, and not all indexes have come along.

SPX and NAZ are far off their highs, Transports made new all time highs a year ago, without Dow confirmation, and in SEPT of 2005 the Utility index topped out!!! And can be a fore warning of end of the bull market.

What you must remember, is the rally from 2002 lows is in the context of a SECULAR BEAR MARKET, which will probably last up to the length of the preceding bull market, which means as long as 10- 20 years!

And there will be a few of these strong rallys, until the Bear has done its job and or run its course. Which is to restore ORDER, and the NORMS.

Dividend yields at near 2% is even LOWER than at any previous bull mkt top! At bear mkt bottoms near 6% is typical.

SPX earnings have been propped up from historic energy company profits and HUGE stock buyback programs.

Insiders are selling like mad.

It has been over 3 years since the mkt has corrected 10%.

Bear markets reduce speculation, volume on the BB (penny stocks) is DOUBLE what it was in 2000 !! DEBT has exploded, instead of consumers retrenching. Demand is being satiated, a gluttony, not pent up.

Housing has EXPLODED with excess speculation rampant and now unwinding.

I don't know if THE top is coming, but do feel some kind of important top is near, and we are now IN the dead zone for market, the seasonals nolonger supplying a tailwind.....IMHO caution is warranted.

Next update? when I feel like it.


Duratek