ITS ALL BAKED IN THE CAKE...now for the frosting

the news of the economic recovery is baked in and now we get to let the cake cool as we ready to spread the frosting. analogies are the best way for the human brain to understand things. with that in mind, the market has fully cooked the economic data and has baked a beautiful cake for us all to enjoy. but, just as we make our children wait to spread the frosting and then eat the cake, we all must allow the proverbial cake, that would be the stock market, to cool and then we should be able to put the frosting on, that would be another 5-10% rally, and then we can enjoy the finished dessert. just in time for the holiday season. sounds good doesn't it?

unfortunately, lots of times during the cooling process, unforeseen things can happen to the cake. sometimes the nice rounded top of the cake falls inward making it look yucky and difficult to frost. sometimes a sneaky child comes by and takes a finger to the cooling pastry. other times, the impatient parent or child starts to frost the cake before it cools and the whole cake gets messed up.

and just as a baked cake can get ruined, so too can a stock market rally. as the cooling process has begun, it seems that the bulls are anxious to spread the frosting. maybe even before the rally cools and the economic and business data confirm what is already believed to be a foregone conclusion. that we are in the early stages of a full blown and sustainable economic recovery.

the cake is baked. let it cool and maybe we will get to frost it properly and then enjoy eating it.

have a grateful day!

larry