an tSionna 3.26.10- If You'd Been To Mars.

If you'd flown to Mars three years ago, were just now arriving home and somebody showed you the chart displayed above of the S&P 500; well you might be forgiven if you simply thought we'd been through a normal recessionary bear market.

Of course reality is much different. The first chart has something like 70 weeks lopped out. It's what you'd get if you folded over the beginning of the 08 credit crisis to our current week. The 2nd chart shows in between the two dark blue lines what really happened.

That trough, say the period between October 07 and July 08, was the depression sequence of the financial crisis. Fears of that liquidity depression were dissipating as the summer wore on last year. After that it has been markets getting back to analysing the economy and where we were in the current recession.

After our brief scare in January-early February markets have in my opinion been sniffing out better earnings for stocks than most analysts current suspect. This is the fuel that has kept this rally going. I think we're going to see better economic statistics going forward well into summer.

Stocks are still overbought. I am still short term net market neutral and longer term net market positive. {Click here if you would like a definition of these terms: Definitions} Commentators have hated this market for months now and they have come up with enumerable reasons why it should sell off. This has me wondering what kind of market move right now would cause the most amount of pain. I think that would be a sharp move upwards over the next few weeks.

On that note: One of the Boston Boys told me a guru he follows thinks the market could be at 1350 by May 1st. I don't see that happening because that's a huge percentage move in too short of a period. However there is no doubt that if that were to occur it would inflict huge pain on many investors who have been trying to short this market for the past six months. I still do think we could be between 1250-1350 by the end of the year though.

*Long ETFs related to the S&P 500 in client and personal accounts.