Another powerful week for the stock market illustrates that there is no arguing momentum. It certainly looks like this rally could continue and perhaps for quite a while. In fact, many market analysts see this trend continuing for a few quarters. It seems clear to this observer that as the market advances in the face of terrible economic news that this rally is likely more about a reassessment of the risk of failure than about economic or business strength. There remains an unprecedented amount of cash on the sidelines and you can almost sense the tension as investors contemplate unwinding their uber conservative strategies in order to climb aboard the rally before it ends.
On the earnings front, expectations have been set so low that it is fairly easy for many stocks to beat the market analyst’s expectations. This will continue to be the case as we move forward for the next several months and keep sentiment improving as a result.
