Today world markets are so far continuing the pull-back that began yesterday. As I have written a couple of times in the past couple of weeks, technically a pullback has been overdue for some time now given the incredible rally since March 9. Incredible is probably the most appropriate word for the past 9 weeks; incredible as in unbelievable. Too far, too fast? Likely. This price action seems over-exuberant in its 90 degree spike; not typical of the early stages of recovery from a bear market bottom.

I would like to get back to longer term optomistic, but in the short term we must remain leary. A regular healthy, mild, correction here could be up to 10%. Beyond that a retest of the November lows is also within the realm of possibilities over the next few weeks or months. Last case scenario remains a revisit of the March lows. This too is within the realm of possibility although we suspect that because this bear is getting longer in the tooth (2 years in October), buying pressure may well kick in on a further plunge to prevent the ultimate lows from coming back. This should all make for a very interesting summer.

Some things that caught my eye today:

"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." See WSJ today: Reasons to be wary of the rally.


"An international think-tank says the first tentative indicators of a rebound in the global recession are appearing in some countries, although Canada is not among them." See: Canada's recovery lags others

Remember this for your future reference: in Canada "we lag, we don't decouple!"


Meredith Whitney still does not like bank stocks here:



"I would not own bank stocks" mmmm...not a statement to take lightly from a world-renowned bank analyst.

And Art Cashin: 'We're Severely Overbought':