Fred Voetsch

Data Suggests This Is Not a Short Covering Rally

On Jun 15 10:59 AM Larry House wrote:

> I think it was a hope/relief rally--not short covering. Instead of
> looking at stock movement, how about lookiing at economic data. At
> some point market action and fundamentals come together. The real
> question is what is that point. Forget bear/bull crap. Look at what
> is going on in the economy.


I agree but of course their was plenty of short covering as well.

View preferred view of the market is to consider the various "pressures" on the market and while there remain considerable downward pressures on the downside (poor economy goin forward; poor demographics; continued deleveraging; overpriced stock market by historical standards) the gap left by the crash in early October left considerable pressure on stocks in the near term and the subsequent decline in January and February built up that pressure. Just like the spring of last year the market was ripe for a rebound.

Now is the time to go back to fundementals and determine where this market is likely to go. Almost all of my data and sources suggest continued downward pressure, likely for several years to come.