Capitalogix Commentary 04/12/09

The stock market often recovers six months before the economy does; but I don't really believe we are six months away from our economy being fixed.  So, I still classify this as a bear market rally.

It is a big one though. The markets have come quite far off their recent bottom. The U.S. Markets moved higher for the fifth week in a row. Yet, it was just the sixth positive week for those indices in 2009.

The S&P 500 is currently trading more than 8.5% above its 50-day moving average, which is its most overbought reading since May 2001.

This rally has been a welcome respite from a seemingly unrelenting downtrend. Historically, I can't find too much precedent for the continuation of a move like this on a global basis. So a correction could soon be expected, or even welcomed.

Normally a market turning-point is tested within a number of weeks. How the market behaves at that time is important. A light-volume decline to or towards the old lows ... and then a heavy-volume start to a new rally would be ideal.

View From the Trenches.

I was talking to a friend of mine who is a partner in the bankruptcy section of a law firm. His market outlook is bearish because he's never seen his section's work pipeline this full before. There are a lot of bankruptcies in process, and a lot of companies talking to him to investigate whether it's the right option for them to pursue in the future. From his perspective, we're not done yet.  I'm not putting too much meaning into this.  Just passing on the data point.

The Pyramid of Misery.

The chart below shows a funny and current version of Maslow's Hierarchy of Needs.

That graphic came from Portfolio Magazine, which has had a number of good articles recently.

Business Posts Moving the Markets that I Found Interesting This Week:

• Is YouTube Doomed? Half a Billion Dollar loss is a tough pill to swallow. (BusinessInsider)
• Salary Cuts Instead of Lay-Offs: Ugly, But It Could Be Worse. (WSJ)
• Loss Aversion: Traders take riskier decisions to avoid losing money. (Economist)
• Teaching Survival Skills to a Technology Start-Up. (NYTimes)
• New Economy Means New Entrepreneurs. (Street.com)
• More Posts Moving the Markets.

Lighter Ideas and Fun Links that I Found Interesting This Week

• Just 53% of Americans Say Capitalism Better Than Socialism. (Rasmussen Reports)
• In an Age of Austerity, Is Thrift re-emerging as a value? (NYTimes)
• Wikipedia for Spies: The CIA Discovers Web 2.0. (Time)
• How Losing by Just a Little Can Help a Team -- or Company -- Win. (Wharton)
• Brain Researchers Open Door to Editing Memory. (NYTimes)
• More Posts with Lighter Ideas and Fun Links.