Sensible Investing

One could certainly think so, given the huge rally we have experienced off March lows, with S&P gaining over 25% in a month. A number of  positive economic reports helped to fuel that rise.  Sales activity in real estate is picking up.  Consumer confidence is up.  Many retailers performed better than expected.  Walls Fargo and Goldman Sachs indicated that their earnings are much better than expected.  Even President Obama said that he sees “glimmers of economic hope”.

However, we’ve been in a similar situation before and saw comparable gains in the market in December and January only to witness them to evaporate.  Is this also a bear market rally?  The next several weeks will be crucial to answer this question, as the first quarter earnings season unfolds.   The fact that the earnings will be terrible is well-known, and it is baked into the market already.  The key is going to be outlooks for the rest of the year.  If we see positive (or, rather, not so negative) estimates, then we can hope that we have already seen the bottom of this market.  On the other hand, fasten your seatbelts in case of poor or lack of outlooks…