The markets clearly want to go higher. The good news came flying in yesterday as auto sales were only down 37% and manufacturing didn't quite decline as much as the month before. This is so encouraging to us that it looks like investors could drive stocks up another 10% or more.
We are being a little facetious as the auto and manufacturing tea leaves show some hope but we may get to a point where investors become too giddy. The economy may not be declining as much but it is unlikely to turn up in the second half of 2009. Many investors are casting hope on such expectations. The result could be an overextended bull and some unwise investment of the piles of cash on the sideline. Nobody wants to miss a big rally but one needs to proceed cautiously as many dangers still lie ahead.
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