Any More Legs To This Market Rally?

The FTSE ended up down today after a month of spectacular gains, it had the odd bad day last week too. The US markets were the same, as bank concerns reared up again. Some of the UK bank stocks have shot to the stars the past two weeks. How long can this last?

There are very few fundamentals to support the rally. In fact, there are only two:

1) People are bored with depressing news and market falls, they want rallies and optimism; it is spring after all. Sentiment counts for a lot, even in the face of overwhelming evidence.

2) Quantitative Easing, yup, printing money is so radical and its effects so unknown that it is messing with the markets. QE seeks to produce inflation, and with inflation coming, rational actors will want to own assets. Hence shares rising…perhaps?

On the easier side, Gold is falling quite rapidly now, back down to $872 (I sold at this level a few weeks ago, thinking it too toppy!). So at least with Gold back in some sort of normal range, it will be possible to switch out of stocks when the next bear hits.

I have a hunch this is going to be a lot sooner than we would all like it to be. The chart is a great prediction from Market Oracle last year.

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