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Why despite warning signs, stocks will continue to rise over the next few months

I've been reading several comments regarding the upcoming 'double dip' which is right around the corner.  Gains for this quarter are all 'window dressing' and we're heading for a great fall come April.

Mutual fund managers are fully invested and trying to chase the market gains.

Employment - even with a slowing of job losses, we are not heading the correct direction, and indeed with the required additional jobs needed each month, we are losing ground. 

US Treasury outlay is massive, with a potential shortfall for 2010 of $1.563 Trillion.

Blatantly false Commerce department numbers on Retail sales for February.

Looks ugly doesn't it?

Then you have Paul Schulte touting: “The world is awash with liquidity,” Schulte told CNBC.

Of the four points Schulte attempts to make; Sovereign credit default swaps up and hot rally, investment grade credit is good and 'some are getting to year lows', kind of a reblurb for sovereign credit - but for emerging markets, stating it is in a great rally - but finally, he actually makes some sense.

The TED Spread is at 10 basis points.  Interesting.

TED spread, which is the difference between three-month LIBOR (the London Inter Bank Offered Rate which is in euro dollars, also called The Euro Dollar Spread, thus TED) and three-month US Treasury bills.

Very recently, the TED spread had reached huge proportions - showing impending doom or at least doom (perhaps already here).

So -what does a TED spread of .10 mean?  Banks are lending to each other again at a reasonable rate.  This means at least they feel that the money they are lending is going to be worth less than it is now.  How can we possibly have a low TED spread, with mortgages worth less than the asset supporting them and commercial property ready to get back to 1980's level vacancy rates?

Prognostication time?

1. Manufacture survey will be good, bumping stocks up further
2. Housing starts will be flat this week
3. Real Estate will start off hot this spring and crash and burn by July

So - stay in the market, go short in July and ride it down for at least 6 months.

Disclosure: None