March 8, 2010

US markets rallied sharply last week, and closed above key technical levels, giving strategist hope that further gains are likely. Given positive corporate earnings, a stronger than expected jobs report and additional evidence that the economic recovery is taking hold, we believe that a continued short-term rally is very likely. Based on technical analysis, we think the S&P500 could gain another 5% to 7% in the short-term, before facing new resistance. None-the-less, we caution investors that market participants are very nervous. As such, a little bit of bad news could go a long way to generate a sell off.