Quote from scriabinop23:
Bravo?
If you look at this thread, you'll see a consensus of bear, bear, bear, bear (something like that).
Forget discussion on support/resistance levels (because I am afraid to buy right at these prices considering technicals, calendar timing, and unanswered questions [financial's earnings and fed?]), but the valuation/cheapness of the market is an unanswered question.
Let me point out two ideas for the bullish case:
1) yield curve went from flat/inverted to historically normal. This means by typical definitions (lets put aside ideas that asia was supressing the long end of the yield curve) the bond market is NO longer predicting a recession in the future, and once was. So does that imply that we have hit the 'recessionary' period (in relative terms)? [ie we do have a housing recession, but not a net GDP recession]
2) 10 yr yields are hovering around 4.5%, and high quality risk spreads are not more than 10-20 basis points over levels 3 months ago (before the credit crisis). This mean stock buybacks still make much sense. A company with a 10% earnings yield can borrow at 5-6% and increase their earnings by 4% on whatever amount they buy back, allowing for a little leverage. This is a bullish pressure.
Despite that, maybe all the bears (ET consensus) are right and the consumer is toast, and earnings have peaked, and #1 and #2 are lousy points.
