OK bears, I think we need to go into hibernation for a while. Nothing I see in the numbers is bearish so far, so there is no point dissecting every little twist and turn in the market.
When the market turns down again, it will be obvious. Now is not that time.
The market needs a jolt to send it back down, like it had from the events of last fall.
What will that event be?
1) Rising interest rates. Possible, but I would be surprised if we go much higher. Inflation is fairly tame at the present. In fact we just had negative yoy rates, down 0.3% from last June. The drop was caused by gas prices dropping. Without the gas price drop we would be up over 2%. I don't think the economy can withstand higher rates.
2) The Provincial Government slipping further into deficit and having to slash spending, just as the big projects..bridges, Olympics-related, Canada line come to an end.
3) The World economy having escaped financial Armageddon, just sinks into a very severe recession, hitting commodities and bringing fear back into the minds of asset buyers.
I think 2) and 3) are more likely. Despite the fact that we have unprecedented rate cutting and stimulus packages around the world, we are sinking deeper into recession daily with rising unemployment and lower government tax receipts. The governments which were blowing the horn of stimulus, will soon be panicking about the burgeoning deficits, and will be looking to make cuts.
So I don't think we need to look at every statistic hoping for signs of a change. When it comes, it will be unmistakable. Until then I am going to enjoy the summer, and wait for the jolt.
Five steps, where's the stumble? - *Preface: Explaining our market timing models* We maintain several market timing models, each with differing time horizons. The "*Ultimate Market Timing Mod...
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