Jay Taylor: Turning Hard Times Into Good Times

click here for audio

S&P 500 Backed by Most Momentum Since 1986: Technical Analysis

U.S. stocks almost have the most momentum since 1986.

The 14-day relative strength index for the Standard & Poor’s 500 Index has exceeded 65 since March 5, the longest stretch since 1995, according to data compiled by Bloomberg. Today would mark the 27th consecutive day, the most in 24 years.

RSI identifies possible turning points by measuring the degree that gains and losses outpace each other. While readings of 70 or more are considered evidence that an index may decline, the current streak suggests investors are reluctant to sell, making a collapse unlikely, said Joseph Keating. (more)

Expert: Bear Market Can Last for Another Five Years

The bear market could drag on for another five years or more, says Bill Spiropoulos, CEO of CoreStates Capital Advisors.

"We continue to climb the wall of worry. No one believes this thing. And all the negative tales about how the world is going to end next month? They’re wrong," he said.

Investors should prepare for the bear market to stay, but Spiropoulos predicts that the Dow will reach 12,000 this year.

"When I say secular bear market, we’re talking about a sideways trend," Spiropoulos told CNBC.

After the bear market ends, inflation will erode into some investors' portfolios, he said. (more)

IMF Prepares For Global Cataclysm, Expands Backup Rescue Facility By Half A Trillion For "Contribution To Global Financial Stability"

And all the pundits thought that the IMF would be on the hook for just €10 billion... The IMF has just announced that it is expanding its New Arrangement to Borrow (NAB) multilateral facility from its existing $50 billion by a whopping $500 billion (SDR333.5 billion), to $550 billion. The current lending participant group of 26 entities will be increased by 13 new members all of whom will contribute token amount of capital to the NAB. The one country most on the hook in the new and revised NAB - the United States of America, will provide over $105 billion in total commitments, or 20% of the total facility. The US is currently on the hook for just $10 billion, meaning its participation in global bail outs just increased by $95 billion. And the bulk of these bailouts will certainly be located across the Atlantic. What is most troublesome is the massive expansion of the NAR. If the IMF believes that over half a trillion in short-term funding is needed imminently, is all hell about to break loose. (more)

Surging Interest Rates Ahead, Part I

Brace yourself for one of the greatest interest-rate surges in decades — beginning first in the long-term Treasury markets … later spreading to shorter term Treasuries … and ultimately enveloping nearly every loan, debt, credit, and money market instrument on the planet.

This rise may not begin with great fanfare. Nor will it immediately upset the apple cart of the economic recovery. But with the march of time, it WILL gain momentum and reach critical mass.

We have little doubt about this outcome. And today, we begin a two-part series to explain why — plus what to do about it. (more)

VIX Chart Showing Complacency

We’re definitely among the minority, however. The volatility index fell to its lowest level since June 2007 this week. The VIX is at 15 today… light-years from the 80-90s suffered during Lehman’s collapse.

Even in the 20-year history of the index, 15 is low.

"Fear gives intelligence to fools,” says Chris Mayer, citing the old proverb. “Turning it around a bit, we might say that lack of fear makes fools of wise men.

“Right now, fear looks cheap. With the VIX below 16, we are getting close to extreme territory. We are near the limits of what that great rubber band of life will absorb before it snaps back. The VIX usually hovers between 10-20. So we are not quite there yet, but the tension is building.

“Given all that is going on in the world, it is remarkable to find investors so unworried. The financial system is still a rather creaky affair. Leverage is still high. Banks remain undercapitalized. The credit cycle has not yet run its full course, as there are still significant credit losses hiding in the cupboards of banks.

“Then there are the governments of the world. The U.S. has awful credit metrics. It is bleeding money and owes huge debts. The states are also bleeding money and have large debts, including giant gaps in unfunded pension liabilities. They are perhaps worse off, because unlike the U.S. government, the states cannot print their own money. Then there is the EU. And Japan.

“There are only a few ways to cure such ills, and none is painless. One thing is for sure: These ills can’t go on forever. So despite being in the middle of a usual historical range, these are not usual times. In the context of our times, fear looks cheap.”

Chart of the Day