Review of this rally

Since the March 6th intra-day low at 6,469.95 the Dow Jones Industrials have advanced 32.79% into their recent high at 8,587.55. The Transports bottomed on March 9th at 2,134.21 and have advanced 59.70% into their recent intra-day high at 3,408.28. During this time the S&P 500 has advanced 37.9% and the Nasdaq 100 also advanced some 37.9% into its recent highs. Then, there is the CRB Index which is up some 20% from its February lows and crude oil, which is now up from its February low some 68%. Yippee! Obama has saved the world. The job numbers were better than expected. The bear market has ended and the economy is now on its way to recovery.

NO!!! What we are seeing is a bear market rally. The Obama team thinks their efforts are beginning to save the world and the general public is being lulled to sleep thinking that the worst is behind us. This is not the case. Regardless of what label we put on the March lows, the rally continues and the longer it does, the more false confidence it will foster.

I believe that we are seeing a “resting period” and that the market is appraising the damage to its structure. While the Dow theory does not tell us how long the bear market is apt to last, when I look at the structural/technical damage that has been done from a cyclical perspective, which has absolutely nothing to do with Dow theory, it tells me that this bear market is not over and that we are merely seeing a bear market rally.