With 10 of the 19 banks participating in the stress test needing to raise capital (biggest being Bank of America at $35 Billion), the worst news, they say, is over. So now the question must be: are we in a Bear Market Rally or the start of a New Bull Market? The S&P 500 is up over 35% since the March 9, 2009 lows. Consumer Confidence jumped from 26.9 (March 09) to 39.2 (April 09). Even bad employment data is news for the market to rally.  From a personal example, I went shopping at a local mall two weeks ago and then went back this last weekend. Two weeks ago the mall parking lot was empty and the people that were there were not really buying. This weekend I thought it was black Friday or Christmas. Everyone is feeling like this economy and the market are turning around.

Here is the problem: Things are better but we are not out of the woods yet. The news for the consumer spending is picking back up but businesses are holding steady. They are not looking for new workers and they aren’t spending. To get the market back in complete rally mode, we need both consumers and businesses to be on board. Right now businesses are on the sidelines and unemployment is still high.

Therefore, looking at the S&P 500 spdrs (SPY), I see the market heading lower before it goes up. Specifically, I think it will head down to 85 then to 100. We’ll see if this holds true.

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