There is quite a bit of discussion right now about if this market rally is real, and if it is how long it can last. The last round of corporate earnings weren’t as bad as many expected, and there seems to be some tempered optimism that this could be a sustained rally.

As much as I would like to see the recovery turn into sustained growth, I have to agree with Rick Pendergraft’s article a few weeks ago that this rally will soon run out of steam.

The reason is a bit different than Rick’s however. Looking at the charts, instead of the potential inverse head-and-shoulders that Rick points to, my reasoning is a little less fancy.

“Sell in May and go away”. As corny as it may seem, there is some merit to the old saying.

Here’s a chart of the last 5 years

A little over a week ago, Rick Pendergraft pointed out the eerie similarities between the stock market in 1974 and today. It is quite startling when you realize how much the two have in common. Even the declines in the Dow are within a single percentage point of each other.

That got me wondering if there was any correlation between the beginning and end of historical bull and bear markets.

A quick search on the internet turned up a chart that showed bull and bear markets since 1942. Since the chart was created last September, it is a bit out of date, but the historical data serves our purpose.

Utilizing this data, I was hoping to find that the recent market bottom would be 393 days after July

Investors can now trade triple-leveraged ETFs. That means three times the return (or loss) of the underlying index. Rick Pendergraft says stocks could be in line for a major rally in the first half of 2009. If it does, the Large Cap Bull 3x Shares ETF (NYSE:BGU) will ensure huge profits for investors willing to “think big”.

This from Investor’s Daily Edge:

What is my top pick for 2009? It is a new Exchange Traded Fund from a group called Direxion Funds. The people at Direxion have taken ETFs to a new level they are offering funds that have triple the leverage of the underlying index.

What does this mean? It means that if you have one of these ETFs and the index goes up one percent in a day, this ETF will go up three percent. If the index

We may be in the middle of a pre-Christmas rally, but Andrew Gordon says next year’s economic outlook is dire. Job losses are soaring and consumer spending is drying up. And the great unwinding of the credit cycle is not done yet. Andrew says the Dow is due another swoon, perhaps all the way down to 6,000.

This from Investor’s Daily Edge:

It’s a bullish sign when the market turns its back on horrible economic news. How the market could ignore an historical loss of jobs and go up 259 points like it did last Friday is beyond me … unless the market has bottomed.

Maybe it has. Maybe my colleague Mr. Rick Pendergraft is right. He usually is.

But every fiber of my being is telling me, “Don’t believe it.”

When the dotcom fantasy caused the market to crash, Greenspan quickly lowered rates and gave the mortgage industry the green

There are some spooky similarities between today and December 1974, says Rick Pendergraft. At that time, oversold stocks began a major six-month rally. That’s why, contrary to popular belief, stocks might just be the best place to be for the first half of 2009. But if history does repeat itself, Rick says investors should expect more trouble in stocks in the second half of the year.

This from Investors Daily Edge:

I don’t remember much about 1974, I turned 7-years old that year. I remember that my dad lost his job with Firestone that year and that my family almost moved to Georgia in order for my dad to stay with the company.We ended up not moving from New Castle, but ‘74 and ‘75 were tough years for my family.

So why is 1974 so important 34 years later? The last time the employment picture was this bad

Rick Pendergraft says the public will soon become desensitized to the ugly news that keeps coming out of the economy. That’s when individual investors will return to action. And that’s when it will be time to buy stocks again.

This from Investor’s Daily Edge:

During a CNN radio interview on Thursday, I was asked what it is going to take to get the market back on track.  This was the day when we saw initial jobless claims surge to the highest level since the attacks of September 11.

What I explained to listeners was that at some point the average person, the middle class if you will, is going to become numb to the dire economic reports.  Day after day we are bombarded with negative economic news…initial jobless claims hit seven-year high, retails sales set record drop, consumer confidence hits all-time low…

Back in 2002, the environment was much the same.  Each day,

Rick Pendergraft says we won’t see an economic recovery before one of the housing, auto or labour markets stabilize. Friday’s nasty unemployment data and earnings reports from GM (NYSE:GM), Ford (NYSE:F ) suggest that our hopes are resting on real estate.

This from Investor’s Daily Edge:

Now that the election is over instead of focusing on what is going to happen over the next 10 weeks until the inauguration, I thought it would serve our readers better to look further out.  Over the next 10 weeks there are going to be numerous news items that will affect the market.  Traders will analyze each cabinet nomination, especially the selection of Treasury Secretary.  There are two more employment reports due out before the inauguration, the holiday shopping season, and the next earnings cycle will start before January 20.

Right now, everyone wants to know how President Obama is going to turn the economy

Dear Friend,

A new month brings a new batch of depressing headlines from the real economy.

U.S. factory activity fell to its lowest level for 26 years in October. Circuit City says it plans to close 155 stores and slash its workforce by 17%, all before the end of the year. And Fitch says credit card losses will likely surpass historical peaks in 2009.

Meanwhile, Jeffrey Lacker, president of Richmond’s Federal Bank, says the government’s response to problems in financial firms may have added to market turmoil.

Still, that won’t stop it from trying to ‘fix’ things.

There are rumors of a $500 billion guarantee for distressed mortgages. There could even be another economic stimulus package in the pipeline in time for Christmas shopping. The markets are in a hesitant mood today. The leading U.S. indexes have all tiptoed around

The stock market is due a bounce after the election, regardless of who wins. But after that, the voter’s choice will have a big impact on industry winners and losers. Rick Pendergraft says biotech and alternative energy stocks should get a lift under Obama, while defense and oil will benefit from a McCain victory.

This from Investor’s Daily Edge:

It’s finally here.  The long awaited and hard fought election will end tomorrow (at least I hope we don’t see a repeat of 2000 where we don’t know who won for weeks).  Rather than make predictions about the election itself, I want to tell you how I think things will play out after the election.

First, I think the overall market will rally after the election regardless of which candidate wins.  There could be a knee-jerk reaction to the downside should Obama win, but this is part of the old belief that Democrats are

Barely one week from the US presidential election, Barack Obama is clear favourite to win the White House. Rick Pendergraft says the stock market will get a post-election lift, regardless of the victor. The end of election uncertainty, combined with oversold markets and over-the-top negative sentiment, should spark a late-year rally.

This taken from Investor’s Daily Edge:

I still think we are close or at a short-term bottom. The sentiment is so over the top negative, I don’t see much room left to the downside. Those that have been thinking about selling have to have pulled the trigger already, right? If they haven’t, I would like to know what they are waiting on.

There are several other factors as to why I think we are at or near that elusive bottom. I was presented with another piece of ammunition just this past week. Some of you long-term IDE subscribers may remember a gentleman