It May Be Coming To An End
Let me preface this by saying that I've been very wrong about the market since the beginning of May. Other than my buy and hold options positions, I've traded nothing but euros, pounds, yen and dollars in my FOREX account since July. The stock market is just too irrational at the moment to be worth my attention. All that said...
The rally of the last few weeks has been driven utterly and solely by crappy stocks. ABK, FRE, FNM, ETFC, C an so on. Even stocks like the old Lehman shares of that long-dead corporation tripled yesterday. Once you strip the garbage out, volume on the rest of the market (i.e. real companies) has been light, even for summer.
What happens next? Most things I watch, such as the Nasdaq (QQQQ) and the oil names just plain aren't making new highs, while the dollar has not continued to go lower despite the continuing strength in the market. Things are diverging--we have global selloffs beginning--China is in full-on crash mode. How long will we hold up? I don't know, but it seems that we are very close to running out of gas in this bear market rally's tank.
Long story short, the S&P will be under 800 at a very minimum by the end of the year, and the 666 low will be taken out in 2010, one just has to be patient and wait for perception to catch up to reality.