10 more reasons why you should not buy now

Market Commentary:

Prolonged suckers' rallies tend to be especially vicious as they force everyone back into the market before cruelly dashing them on the rocks of despair. I would rather avoid any dashing if possible.

Yesterday, I gave you 10 reasons why we are not likely in a bull market. Here are 10 more reasons why you should think very carefully before chasing the herd.

1) According to Stockcharts.com 92.14% of stocks on the NYSE are trading above their 50-day moving average. A reading that high has proven to be the peak in the stock market over the last eight years. In the chart below notice what happens to stock prices when this indicator spikes either high or low on the chart:

2) Fannie Mae lost $4.09 a share and is asking for another $19 billion more from the government. They see losses continuing and 2009 will be worse than 2008. They see home prices declining 7-12% in 2009. Real estate values are still deflating. Home prices in the U.S. dropped the most on record in the first quarter from a year earlier. The overhang of unsold properties on the US market is still near a record 11 months.

3) February Unemployment figures were revised down from -651k to -681k (-30,000) and March was revised from -663k to -699k (-36,000). Here's the problem - to have a healthy economic recovery you need to gain about 300,000 jobs a month.

http://market-ticker.denninger.net/authors/2-Karl-Denninger/P2.html

4) Banks are still maintaining tight guidelines. “In fact, the weekly Fed data are now flagging the most intense declines in bank lending to households and businesses ever recorded.”

http://finance.yahoo.com/tech-ticker/article/244597/Merrill's-Rosenberg-Goodbye-Thank-You-Yes-It's-Just-a-Sucker's-Rally?tickers=xlf,dia,spy,%5Eixic?sec=topStories&pos=9&asset=&ccode=

5) China is fast slipping into deflation. China’s PPI fell 6.6% in April, the fourth monthly decline and the steepest (PPI fell an average of 4.6% in Q109) suggesting further pressure on consumer prices ahead. China's CPI fell 1.5% y/y in April, the third consecutive decline (CPI fell 1.2% y/y in March and 1.6% y/y in Feb).

http://blogs.wsj.com/economics/2009/03/10/economists-react-china-in-deflation/

6) Regression analysis shows that major troughs brought declines in excess of 50% below trend. We are 79 points above the regression line.

http://www.dshort.com/articles/2009/regression-to-trend.html

7) Middle East (Gulf countries) were “informed on the quiet that Federal Reserve Governor Ben Bernanke had been premature in his optimistic forecast of slightly positive growth in the second half of this year” and not to expect an US recovery before 2011.

http://www.debka.com/headline.php?hid=6062

8) Gasoline prices have surged nearly 9% over the past two weeks. $3 gasoline this summer is going to put the hurt back on.

9) The stocks up the most in this rally have the worst fundamentals. The “dash for trash” is stocks most heavily shorted, suggesting most of the buying has been short covering.

10) Market leadership (Technology) is looking toppy and beginning to lose dominance.

Be patient.