Is the rally a psych-job?

Alan Abelson is profoundly skeptical of recovery talk:

The melancholy fact is that our ink, online and TV colleagues can be too easily snookered by Washington, Wall Street and Corporate America, all of whom are desperately peddling recovery rather than reality.
Take the big play given to the 3.6% rise in sales of existing homes last month, which helped power a nearly 200-point rally in the Dow that lifted that venerable index over 9000 for the first time since January. Adding to the excited stock market response was the refrain in virtually every story, whether recounted in print or on the Internet and the tube, that this was the third month in a row of higher sales, signaling that the long-awaited but frustratingly elusive bottom in housing had been reached. Really?
As Mark Hanson of the eponymous real-estate advisory points out, it’s a seasonal phenomenon that until recent years has happened every year.
Indeed, the wonder of it is that, with prices soft and mortgage rates down, sentiment better and supply restrained by foreclosure moratoriums, sales weren’t higher than a year ago. Some of those benign factors are changing, and not for the better: Rates are creeping up, moratoriums are ending and foreclosures are on the rise. . . .

Lots more analysis there. And, really, there’s no shortage of bad news, including the possibility of another wave of bank failures caused by exposure on bad commercial real-estate loans. Also, there’s this:

Of course, the mood could shift in a hurry. . . . The growing herd of bulls is itself a warning to some investors that the current surge is about to run its course. Plus, the longer-term outlook for economic growth and corporate profits still is uninspiring.
Plus, the longer-term outlook for economic growth and corporate profits still is uninspiring.

Which is to say: The market will either go up, or down, or stay flat. Man, I’m starting to think I missed my big chance — become a financial writer and gain a reputation for genius with carefully hedged analysis that never actually amounts to prediction. Like being a weatherman who never gets around to saying firmly, “It’s gonna rain tomorrow,” you’re always 100% accurate.

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