I Want to Believe...

Global equity markets rally since March 6 have been very impressive. S&P 500 alone is up 30% in less than a month time. While this rally may still have legs, I am hesitant to play for two reasons.

First, the market is technically due for a pullback (if not the outright return of the bear). The only bullish sign I can see is the technical breakout of some markets, like Hong Kong and China, but Chinese officials are now voicing their concerns of excessive lending growth, which is bearish to the market.

The second reason is that fundamentally I still believe this bear market is not over. The US economy deterioration is improving (i.e. not getting worse, but still bad) and Credit Suisse indicates 2010 and 2011 are the years with even higher mortgage rate resets than 2008. I want to believe the worst is over, but in a market like this, better play safe than sorry.