Bear Market Rally Extends for Third Day

Economic bad news continues to come in and the market just shrugs it off. Is the bear market over?

Jobless claims rise as retail sales slip. Here we have another revision to the jobless claim numbers. The total number of claims is now at 5.3 million. This is the sixth time in seven weeks that a new high has been set. More job cuts were anounced.

The Commerce Department said that the retail sails fell by 0.1 percent. This is less than the 0.5 percent that analysts expected. But the government indicated that the January performance was up 1.8 percent, only 1 percent was expected.

We also have news about business inventory. It was reported that it was cut again in January for the fifth straigh time. Yet the market did not responde negatively to this.

What the market did was rise because the news from GM was promissing. GM told the Obama administration that it will not be in need of government aid as soon as they though because their cost cuts are taking hold.

Also, Standard & Poors cut GE's rating to AA but indicated that no further cuts are being considered. Investors were reported to have expected a deeper downgrade. This looked promissing to them. And the market rallied.

Fed reports record fall in household net worth. But that bad news was about the 4th quarter of 2008. I guess it is true that the news gets built into the price. Because these numbers were over two months old. The market completely ignored it. And the market continued to rally.

Asia:
Nikkei => 7,198.25, -177.87, -2.41%
Hang Seng => 12,001.53, +70.87, +0.59%
Straits Times => 1,493.53, -11.98, -0.80%

Europe:
FTSE => 3,712.06, +18.25, +0.49%
DAX => 3,956.22, +42.12, +1.08%
CAC => 2,694.25, +20.05, +0.75%

U.S.:
Dow => 7,170.06, +239.66, +3.46%
Nasdaq => 1,426.10, +54.46, +3.97%
S&P => 750.74, +29.38, +4.07%

My Portfolio:
AMD => 2.40, +0.09
AMD DG => 0.12, unchanged
F => 2.10, +0.14
FPL DI => 2.35, +.025
MIPS => 2.44 +0.07 (Stop @ 2.33, Sold @ 2.44)
NG => 2.48, -0.12

So, what do we have? We have a third day of gains in the market. The second time in three days that the U.S. market put in more than 3% in gains. Is the bear market over? Don't be silly.

Take a look at the three indexes. This isn't the first time that the market has put in repeated gains or has turned upward. For instance, the Dow put in 5 consecutive market days of gains between November 21-28 of 2008, over 1200 points. Yet the following day, gave back 600+ points. So is the bear market over? Not in the least.

The only way we will know if the bear market is over is when there are more positive days with gains averaging higher than the losses of the negative days which should be fewer and in between. When that happens we should see the most recent closing bottom (support) tested and rejected and then the previous ceilings (resistance) tested and blown through to create new supports to be tested and rejected.

At least two of these and we can say yes this was a bottom. But the chances are we will see the past bottoms (Dow 6500, Nasdaq 1260, S&P 675) retested before the ceilings are tested and broken. What I will say is that responsibility is returning to market, and we may see some stagnation until jobless claims slow and more companies report profits. But be prepared to jump off the bull, and onto the bear, at a moments notice.

That is my opinion, you can take it or leave it.

Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.