From the point of view of liquidity, the addition to the market of the $30B MSFT is going to buy back adds a lot of immediate liquidity to the market. Other smaller buy backs from many other companies add to that fuel. Since MZM has not declined markedly despite the fed's tightening, liquidity in general is not a problem. Yes, foreigners have been reducing their US market exposure, but those guys have been all over our markets at tops, not at bottoms.
From the point of view of the economy and where we are in the cyclical pattern. If the next job reports comes back above the 250,000 job, that puts us back on a mild growth path, delaying the time at which "consumer tap out" will crimp the economy.
Sentiment indicators. We are completing a three month period in which many of the sentiment indicators (glaring exception, advisory services lopsidedly bullish, but look at what they do, not say) have reached few times extreme pessimism.
Last, valuation, with rates (10 years) at 4.48%, a PE of 20/22 is not unreasonable (Yardeni and "Fed model" would actually say that the market, as far as the S&P is concerned is about 20% to 25% undervalued, since the S&P current PE is between 16 and 17)). Sure here and there we have NFLX, TASR and NVEC with stratospheric valuations, but a good chunk of the tech sector is quite fairly valued, like OVTI, SSTI, SNDK and even INTC.
Thus, IMTO, maintaining the bullish position is still warranted, and a move of 30% from the lows here at 1875, will just get us "mildly" overvalued at above 2400, still within the range of the last map. Since the last three month basing period has been much longer than I expected, I would not be surprised to see even more hesitation after a ramp, but a major bear market, would require much higher rates, labor market contraction, and excess optimism in the markets. I, for now do not see these conditions, but that can rapidly change.
Gee, that is almost a Maulding like rant...apologies.
