BEAR MARKET RALLY : Too much hope

In the graphic above, we can see the evolution of the SP 500 during  four Bear Markets. After the impressive last 9 weeks, we are still clearly in a downtrend that can stay with us for a while .

The “green shoots” of the Economy, and the hopes for a fast recovery have translated in a Bear market rally that is comparable to the ones that we had during the Great Depression 1929-1932.

U.S. railroad freight traffic is running about a fifth lower than a year ago. It’s one of several less obvious indicators that all is not well, despite the strong financial market rally since early March.

The continuing slump in weekly railroad traffic reflects sluggish industrial activity and consumption. Shipments of industrial products are down almost a third over the past year, while raw materials like coal, metals, and even crops also show steep drops.

We think that  we are not out of the woods yet…