Explain why I should be bullish.

U

upandcomer

I do not see any reason to be bullish right now. This is what concerns me:

- Budget deficit
*Increased taxes and spending cuts will enact contractionary forces.

- The housing market is shit and its recovery has stalled.
*Risk of housing crisis, round 2.

- End of QE2
* Highly doubt there will be a QE3 with inflation worries.

- Europe situation is terrible
*Stronger dollar?

- Market has been on a tear (up almost 30% since September)
* Correction seems imminent

- Signs of economic recovery are dwindling.
 
The obvious reason to be bullish US equities are:

1) the market is going up
2) the potential for a weak dollar if capital utilization picks up before the fed contracts the money supply.
 
Quote from emg:

if the market is about to crash, guru ben bernanke will implement Qe3.
More...

Not necessarily.

QE-2 is not popular with the population due to inflation (food and gas prices) as the value of their homes dwindling.

Politics does play a role. The parlor trick known as QE-3 IF implemented, will probably be just in time for the 2012 elections (with the public clamoring for ANOTHER stimulus).

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As for Mister Market, SPY, proxy for the market, just hit a 20 day low and its Bollinger width is the lowest/tightest in 6 months. Time for some range expansion.

In other words, more to come. We'll see IF a 55 day low ($125.28) holds as support. Ditto for the number of 52wk NYSE new lows exceeding 40.

Irrespective of QE-2, summer's approaching. Just as it does every year. Don't expect much to positive until just before (of just after) the 4th of July.
 
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