Breaking news! Bernanke says "economy still very weak"

Talk about stating the obvious. This is also the same message I continue to hear in commercials and in TV sitcoms. I've said here before that whenever the general media makes mention of the economy or some trend in the market it's always a great contrary indicator because once these guys are made fully aware of what's going on the economy/trend that trend in place has likely been fully discounted and probably then some meaning a turnaround in the opposite direction is imminent or has already began. In early 2009 I remember my Italian grandmother asking me what were my thoughts about the depression. This literally captured the expression "everyone including my grandmother knows about this".

So, here we are with the stock market up huge year over year, credit spreads collapsing year over year and the yield curve extremely steeply sloped all sending a strong message that things are going to be getting better in the months ahead. Yet, Bernanke and the media are still telling you the economy is very weak and mom and pop investor (who are terrible market timers) are still nowhere to be found. To be bearish over the next 12-24 months means that Bernanke and the general public and going to get it right while the stock market along with credit markets and Mr. Yield curve with his impeccable record get it wrong. To me, this seems like an ice hockey matchup between Germany and Canada respectively. This is the way I see things and why I'm bullish longer term. I mentioned the other day how there's tons of ways to analyze the stock market but only few indicators are worth paying attention to which actually work. The above are my long term indicators. It's a known fact that the general public is the dumb money while the stock markets, credit markets and yield curve are the smart money. (Yes, I know the stock market can be subject to irrationality which is why the message of the credit markets and yield curve should corroborate). I have found that regardless of the issues and concerns of the day which can be sliced and diced in many different ways, at the end of the day the dumb money and smart money are what they are and end up living up to their reputations. That's my way of cutting through all the bullshit as I described the other day.

I realize it takes faith to look across the valley when the smart money is signaling something that can’t been seen today. Let's face it...it's easy to be bearish and difficult to be bullish longer term. Even though I've been longer term bullish since last year I'll admit that deep down I'm still worried that we're never going to get out of this mess, that perhaps this time it's going to be the "big one" where we see the collapse of civilization as we know it which will overwhelm any positive message given by the "smart money". Deep down I worry that something like a Greece default or what have you is going to be the trigger that sends the market back into the abyss. But I have found time and time again that the difficult path that is the right path when it comes to the market and in life as well. There's no guarantee following such a path will bring positive results but very few things are guaranteed...it's all about probabilities. In addition, skillful money management and market timing can help you avoid or limit damage if you are wrong about any conviction you have about the market but you have to be careful not to overtrade and go 100% cash just because you feel a ST counter trend move might take place otherwise you run the risk of getting left behind.

I speculated earlier this year that it's likely for the market to enter a multi-month consolidation phase given that this was the behavior of a bull market after about 10-12 months from its onset. This appears to be what's taking place and it's going to test the resolve of bulls like me. What would invalidate this thesis? A break below 1000 on the SPX would be a serious danger sign with 950 the ultimate line in the sand. I don't believe either will be challenged. At the beginning of the year most pundits believed the market would have a relatively strong first half and weak second half. I think the opposite is likely.