Letters

 The stock market has risen over the last month in what appears to be a "bear rally". Most market indicators suggest further downside. A recent article by Hulbert in WSJ, an analyst who uses a wide range of data, suggests further downside and that stocks are still overvalued. High equity allocations for many investors, one of the more robust indicators of overvaluation, are at a decade level high.  I look for patterns. Despite some intraday volatility, it seems that a regular pattern of developing the open is operative. If the market opens high, it continues to edge higher. If it opens lower, it continues to drop during the day. I assume this is a bear market pattern of lower lows. The pattern since January continues downward. Moves upward can be exciting, and veterans of 2009 trading will recall the supposed bear rally that rose and rose, befuddling many technical analysts. When the market rises, it does so quickly. Meanwhile, though, most are predicting continued downside.