It Took Some Time, But We May Have Pulled Through

Since my last post on 4/12/09 the S&P 500 (^GSPC) has continued on it’s upward rally. We were able to break through the resistance around 878 and were able to see consistent higher lows which is the main indication of an uptrend. The VIX (^VIX) shown in the second chart below is also indicating that the market may return to normal volatility levels. While the technicals of the market look to be heading for higher highs I would still advise caution, as I am not completely convinced that this rally will hold given the current amount of mortgage’s including balloon rate’s that will adjust this summer.  I will also be careful of the extreme inflationary environment that we will be exposed to due to the current administration, as it is possible that the market’s rally is only reflecting future inflation and not true market growth.

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