Some important indicators, such as the VIX, the rate spread between LIBOR and Treasuries, and the relative performance of high yield and investment grade corporate bonds are supportive of the positive S&P 500 direction.
On the other hand, the cyclic price action demonstrated in the past 15 years, which is well tracked by trend following methods, suggests that we are not yet in a bull phase.
Of course there is more upward movement somewhere in the future to get us to a bull phase, and we could be in that transitional period now. It’s just that we have a hard time looking past the the economic situation which really stinks once your strip away of the rosy predictions of US officials who are hardly objective.
Nobody can really say what the next 6 months or 2010 will look like. So many things have yet to work through the pipeline. It could be better. It could be worse.
World Bank President Robert Zoellick said “Right now, the international system appears to have a sufficient amount of stimulus … The danger is if you spend too much government money, you create a different problem.” He said the stimulus alone is “like a sugar high” unless the credit markets are functioning properly.
The World Bank forecast in March that the global economy will contract 1.7 percent in 2009 and increase 2.3 percent in 2010. Note that results in an average growth of 0.25% for 2009-2010.
The American Association of Individual Investors weekly poll shows more bears than bulls; more bears and fewer neutral investors than normally.
Price Curve Flattening & Volume Declining
VIX Down, S&P UP
LIBOR/Treasury Spread Lower, But Still High
Junk Rising More Than Investment Grade Corporates
Moving Averages Not Yet Converged
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