The US market is determined to have a rally, irrespective of the economic news and prognosis.  The S&P500 has managed to remain over the resistance level of 800 for this week.  The DJIA still has 150 or so points to go to get to 8,000 and the FTSE still has around 125 points to go to get to 4,000.

I have read comments that expect this rally to last until the end of April.  Then we have the old addage come into force, “Sell in May and go away”. 

So what is there to sustain this rally?  Yesterday the initial unemployed came in at 652,000.  It has not been under 600,000 for weeks, or is it months?  The jobless roll in the US has increased to a record 5.56 million.  That’s just the ones they count.  Not counted are those that have given up looking, those in menial part time work, and those that have fallen off the list because their unemployment benefit has run out.

The talking heads would have us believe that holding stocks for the long term is the way to go.  If you bought stocks in 2000 and held them through until today you would have lost 60% in real inflation adjusted terms.  If you bought stocks way back in 1966 and held them until today, in real terms you would be all square, (no profit, but no loss).

We all know we should buy low and sell high, this is in part what gives this bear market rally legs.  The investor is keen not to miss the bottom.