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Where's The Rally?

Stocks are due for an oversold bounce. Where is it?

Bears--which are pretty much everybody on the Street these days--point to one culprit: financials and the lack of stability. We must improve confidence in the global economy--and Obama will help do that--but first we want stability. But it's not happening. Instead, it keeps getting worse.

Banks are making it clear their position is deteriorating.

The bond market activity is very negative for stocks. Everyone says bonds are oversold, and no one does anything about it. The bond market keeps holding up, even though inflation is an issue down the road. Little or no return on money is still preferable to going into stocks.

Commodities are confirming that inflation is not a concern at the moment. It's a stretch to make a case for anything cyclical right now, and commodities are saying that. Bulls are fighting the short-term tape with any call for a second half 2009 recovery here.

2009 earnings: deja-vu on 2008. Another problem is that traders are taking down numbers for the second half of 2009, and many are now trapped in the buy-an-early-rally trade. We played this game in November, put a little money in the market on a 2008 second half turnaround, and it hasn't worked.

Bottom line: the recovery keeps getting pushed out. The market is not going to look out a year and a half, and so there is no hurry to buy. That is the position of the majority at the moment

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