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Jaws 2009

|Includes:SPDR S&P 500 Trust ETF (SPY)

The S&P 500 index has diverged from the earnings trend since the rally started in March.    We all know what happens next is the jaws close, the question is whether earnings come up to meet the index or the index comes down to meet earnings.Shiller S&P 500 Index and Earnings Click to enlarge
The chart uses Robert Shiller's data from his Irrationale Exuberance site.  More detailed information was in yesterday's post but it did not include this stand alone chart which makes the concern about profits clear.  Program trading can only push the market so far and eventually the market will have to reflect fundamentals. 

We'll see what happens but personally I think that a slow slightly upward move in profits is the best we can expect until there is a boost in consumer demand. 


Disclosure: RYDEX INVERSE NASDAQ 100 2X CL H

Stocks: SPY