The Aft Deck's  Instablog

Stock prices took off on March 9, 2009 at precisely 15:00 hrs EDT, as investors and traders moved back into the hammered financial and technology sectors.

The S&P 500 index tallied up + 40% after hitting a 12-year closing low in March, helping all 10 S&P sectors advance in the Q-2.

The 50 stocks in the S&P 500 that did the worst in 2008 are the best performers in the first half of 2009, gaining an average 35%.

Much of the market rallied between March and May behind the POV that companies and the economy were not headed “under the bus.”

Thanks to the Spring Rally, the S&P 500 is now trading at about 14.8 times average estimated earnings -up from 12 at the beginning of March.

Now the focus looks like it is changing with earnings season just ahead, equity investors are focusing on stocks with strong fundamentals along with attractive valuations that can benefit from a rebound in demand by the end of this year.

Investors are looking for candidates like General Mills Inc (GIS.N). The cereal maker forecast better-than-expected earnings for this fiscal year, and it also said it saw "little" price increases for the period. General Mills' stock gained 3.9% to close at US$58.18 in trading last Wednesday on the NYSE.

Investors are looking for and willing to accept a pullback in here to get a chance to buy companies at more attractive valuations. That is part of the reason investors and pundits are anticipating a correction that has so far has not happened; no matter how hard they try, the Perma Bears are not able to talk the market down for long.

Savvy market players like diversified US manufacturers 3M Co (MMM.N) and Textron Inc (TXT.N), Rockwell Automation Inc (ROK.N), industrial conglomerate Ingersoll-Rand Co (IR.N) and a number of small and micro cap emerging companies like Archer Entertainment Media Communications (AEMC), Call Compliance (COPI), Get Fugu (GFGU), Hythiam (HYTM), Neah Power Solutions (NPWS) and NexHorizions (NXHZ) all of which are now headed North in this rally.

To capture a cyclical upswing, equity analysts at JP Morgan have recently gone "overweight" on the industrial and material sectors and are now "overweight" in all cyclical sectors, including consumer discretionary and technology where analysts are expecting cyclical sectors to experience the strongest earnings growth.

This is rotation, a clarifying signal that we are in a New Bull Market.

Below are the Red Roadmaster's tried and true indicators that the equities and commodities markets in the US and around the world have emerged flying bright colored ensigns.