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Wednesday, May 21, 2008

Bear market rally?

The US stock market had a nice rally since mid March. Dow has surged almost 11%. Yet, we are in recession and problems in the in the financial sector are far from over and the outlook for both consumer spending and employment is quite murky, if not perssimistic. WSJ asks the question, "Is the rally for real?

[Is the Rally for Real?]
















Related, market volatility as measured by VIX has been dropping sharply. Are we going to see the volatility bounce back again some time soon? Just to repeat the previous 3 (or 4) rounds? (see the graph below).

[chart]