It's amazing to see such a powerful rally in this market, and again, the most amazing part is how much financials are rallying, most of them being up between 100% and 200%.
This is good for my portfolio, as I previously stated that I messed up my delta-hedging which resulted in a poor performance in Feb.
Oil is up as well, hitting a three-month high, and the USD and treasuries are a bit down.
But on thing I want to emphasis here is: do not get caught into believing this big fat liar and incompetent Bernanke who is talking up the markets. Mish has done a very good post about his interview.
These kinds of rally do not occur at bottoms and we are still seeing very high valuations in stocks and bonds. One simple way to know if we're facing a sucker rally is to see if it is lead by the financials. And it is...
The other thing to notice is that all the very bad news that are being reported every day for the past 10 days are simply just ignored by the market, which keeps on rallying. This is not a sign of complete capitulation of the markets, but testifies of greedy behavior, which is quite the opposite of what you'd be looking for at bottoms. I would expect good news to be ignored and market slowly declining in low volumes as a testimony of hitting the bottom.
I won't expect the bottom to be V-shaped anyway, but rather U-Shaped or actually even L-Shaped.
For those who want to read a very interesting study of bear markets, I would recommend getting a copy of Anatomy of the Bear by Russell Napier. It's a fantastic work, even if at many occasions, he seems to be supporting the idea that the Fed should be doing more, to help the markets, etc. The Fed should be banished.
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