The markets have been making some positive progress today.  Each day of this troubled earnings season that goes by and we don’t touch or break the November lows is a very positive and constructive sign. 

There have been some hints of positive fundamentals, including the following, in recent days.



  1. The ISM non-manufacturing services index yesterday came in at 42.9, better than the 39 expected and the 40 upwardly revised reading in December.  As a leading indicator of the stock market, this is a positive blip. 

  2. Yesterday, Goldman Sach’s CFO commented that they were starting to see opportunities again in the marketplace and would increase the size of their balance sheet as warranted.

  3. Long bond yields on treasuries have backed up fairly significantly, which may be a sign that the flight to safety at all costs is abating, at least somewhat.  There could be other interpretations as well, but this would be the positive one.

  4. The four horsemen of 2006-2007, Google, Apple, Research in Motion, and Amazon, have started to trot again.  While definitely damaged from a stock perspective, the fundamentals for these companies are far better than most.

  5. The Baltic Dry Index, a daily measure of the price of moving many commodities over seas has doubled off its lows at the beginning of the year.  This is a sign that commodity prices may be stabilizing.  In addition, China’s stock market has done decently year to date. 

Again, with many of these indicators, we don’t yet know if the recent readings are temporary blips or are the beginning of a sustained recovery.  Nevertheless, they fit with our notion that the markets have likely seen their lows and will be range bound for much of this year, in search of economic recovery.  This gives us increased confidence in a floor in the market and a reference point for making future investment decisions as new data unfolds.