Short-Term Key +12
Long-Term Key +54
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Inside this first update of 2009...
***** Happy New Year on the market.
***** The impending tax cut.
***** More on the Great Depression (or, why stocks could rally without an economic recovery!)
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The New Year certainly got off to a strong start, with the S&P 500 closing up nearly 60 points last week. More importantly, the current numbers offer us many reasons to be optimistic about the coming months.
On the housing front, mortgage applications remain very high, and home affordability is near an all-time high. Even unemployment insurance claims, which have been dismally high of late, have ticked down. Normally, we wouldn't make too much of the latter, but since it coincides with improvements in other figures, it gives us a measure of hope.
We are also cheered by the performance of small cap stocks. Last week they enjoyed an even more dramatic rally than the S&P 500. Indeed, the relative strength of our small cap index (the unweighted stock exchange average) is now close to all-time highs. This is NOT behavior typical of a big
bear market.
Among more traditional financial indicators, we note that the yield curve today is extremely positive.
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