From moneyandmarkets.com

market is opening strong. but this item caught my eye this morning.

Here's how technical analysis tells me that the rally of the past 10 weeks is probably not the beginning of a new bull market but rather a bear market rally that will be followed by renewed weakness:

• The stock market rally since March 9 showed rather weak volume. This is typical for a bear market rally.
  
  
• The stocks with the weakest fundamentals — the weakest balance sheets — and the highest short interest have risen the most. This is also typical bear market rally behavior.
  
  
• Most indexes in Europe and the U.S. have risen to major resistance areas. Most have touched their falling 200-day moving averages for the first time since May 2008. A falling 200-day moving average is the most reliable moving average to stop a bear market rally.
  
  
• Momentum indicators, like the Price Momentum Oscillator (PMO), my favorite, are extremely overbought. Right now they've rolled over and issued sell signals.
  
  
• Sentiment indicators show a huge shift since March. Bears are again a minority, both in relation to the stock market and the economy. Since sentiment indicators are contrarian indicators, this is an additional red flag for the overall bearish picture.
  
  

Stock market bears are in a minority ... a red flag for the overall bearish picture.

• Many bullish analysts show analogies with former bear market bottoms to prove their bullish point. They never use the 1930s as an analogy, why? If they did, they'd have to conclude that the market was on its way to new lows ... right now.
  
  
• Since March 9, the stock market rally has the look of a wedge formation, one of the most reliable chart formations. On May 13, as shown in the chart below, the price broke below the lower trend line of this wedge and did so dynamically. This was a sell signal, marking the end of the bear market rally.

The Last Hurrah and Seven Lean Years

Jeremy Grantham - Published 5/6/2009 Jeremy Grantham's 1Q 2009 letter lays out some possibilities for the direction of the markets today, and takes a stab at determining the efficacy and possible effects of the economic stimulus globally...https://www.gmo.com/America/Research/ read more

Depression & Demography

Cannot reverse the great wave of wealth destruction.

by David P. Goldman

Copyright (c) 2009 First Things (May 2009).

Three generations of economists immersed themselves in study of the Great Depression, determined to prevent a recurrence of the awful events of the 1930s. And as our current financial crisis began to unfold in 2008, policymakers did everything that those economists prescribed. Following John Maynard Keynes, President Bush and President Obama each offered a fiscal stimulus. The Federal Reserve maintained confidence in the financial system, increased the money supply, and lowered interest rates. The major industrial nations worked together, rather than at cross purposes as they had in the early 1930s.

In other words, the government tried to do everything right, but everything continues to go wrong.

read more

Long gold Short bonds

One day dollar and euro will lose their purchasing power.

rally almost over

markets are getting toppy