The current rally is looking more and more like a bear market rally.
This is even though my stand remains that the markets will bottom out between March ‘09 and Aug ‘09 and that what we see currently is a bottom formation happening.
Key reason why I think so :-
- Per my estimates for a bottom, I was expecting another capitulation and retest of the Oct ‘08 lows. That has not happened yet.
- Lot of negative news is yet to be factored in. These include:-
- GM going bankrupt (or at least a very painful restructuring)
- Banks like Citigroup getting fully nationalized and broken up into pieces
- Far worse than expected corporate results for the March ‘09 quarter
- Far worst than expected news on global macroeconomic scenario