It is a bit of market folklore that bull markets climb a wall of worry. Put another way, when everyone realizes the news is good and the economy is humming the chances are excellent it is late in the game on Wall Street.
Over the last year we have had a long string of experts tell us it is a bull market, buy, buy, buy. This great bull market we are told is due to a recovering economy. Unemployment rates are at multiple decade highs, and consumer spending has been acting like an overloaded airplane attempting to clear a tree line at the end of the runway. Where is the recovery?n
Today we see Caterpillar release good earnings on lower revenue. Much of the good earnings news has been based on cost cutting rather than revenue growth. Economists are headed for the administration wood shed because they admitted in public that the stimulus programs have not worked. Obamacare we now are told will not reduce costs and will likely increase premiums. A newsflash that would be obvious to any thinking humanoid.
This plus almost certain tax increase to pay for the stimulus programs, Medicare, Medicaid, Social Security, and the national debt make for a really lousy stock market incubator.
Since March 2009 stocks have rallied strongly on easy money, low interest rates, and unfettered optimism by Wall Street and media shills. Now short interest is rising, oil dropping, and insiders are likely easing toward the sidelines.
Who knows what will trigger a market break and test of the March 2009 lows, but until they are tested, hold, and a new rally begins, we have had a splendid bear market rally, not a bull market. Investors beware.
