I am currently long equities in the short term for the following reasons:
1. Performance chasing trumps fundamentals. Even if fundamentals don't merit a rise in equity prices, there comes a point in time at which fund managers have to chase performance to keep their jobs. I haven't met a fund manager that chose to not participate in market rallies and risk losing his job because macro-economic fundamentals don't merit a rise in equities. Currently the market is up approximately 4.5% since the July 4th low of 12492 on the DJIA and approximately 8% since the June 4th low of 12035 on the DJIA.
2. The "Fed Put" and the lesser discussed "Draghi Put". Economic leaders will continue to prop up markets by making vague statements about federal intervention to stop the economy from sinking further. Economic leaders will not allow the market's drug addicted like craving for federal easing to go unsatisfied.
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