Global stock markets have experienced a relatively strong recovery since the middle of March. Although markets in general are still well below previous highs, it makes for interesting reading to reflect on the extent of the correction and subsequent rally, and to review how valuation levels have been impacted.

“The world's favorite season is the spring. All things seem possible in May,” said Edwin Way Teal. And so it seemed during the past week as we witnessed a further improvement in investor sentiment and risk appetite, supported by the viewpoint that the worst of the credit crisis might be behind us.

Besides "buy low and sell high" few other axioms are more widely propagated than "sell in May and go away". This blog post investigates whether this axiom actually has any scientific basis at all.

Enjoy the read.

The last week was characterized by investors increasingly taking the view that the worst of the credit crisis was over. They seemed to be shrugging off further substantiation of the dreadful state of the US housing situation, as they digested the latest round of quarterly earnings reports.

It has become a national pastime to try to figure out where in the stock market cycle we are. This blog post tries a new approach, relying on readers’ collective wisdom by asking them to express their opinion on the direction of the stock market through participating in a quick poll.

Please follow the link to cast your vote.

It’s Earnings, Stupid! Or so it seemed during the past week as the stock market took its cue from a host of better-than-feared earnings reports, propelling the S&P 500 Index 4.3% higher – a bigger gain than for the entire 2007. And what a swift turnaround it was after the market got “GE’d” and was in sackcloth and ashes by the close of the previous week!

Wall Street is rallying today, led by strong first-quarter results from JPMorgan, Coca-Cola and Intel that all topped projections. This is a wild reversal from last weeks earnings reports, giving the market a 150+ bps increase in afternoon trading.

I posted an article on the stock/bond ratio a few days ago, asking whether we were seeing a turning point of any importance in this ratio. In order to gain more clarity on this issue, I engaged the help of readers by posing the poll question: “How do you see the US stock/bond ratio six months from now?” The poll results are reported in this post.

Enjoy the read.

A sense of relative calm descended upon financial markets over the past week. Although fears about the outlook for the US economy persisted, a perception crept into markets that much of the bad news related to the credit crisis was now out in the open, with the result that the equity bulls had reason to feel rather pleased with their performance by the close of the week.

Is the worst of the credit crisis behind us? The short answer is that nobody actually knows. However, the so-called stock/bond ratio serves a useful purpose of indicating to what extent safe-haven buying of bonds as opposed to stocks is taking place, i.e. telling us the language of the market.

An interesting poll has also been included with the post.

Enjoy the read.

Wall Street rallied Tuesday, the first day of the second quarter, on news that two banks slammed by the credit crisis are working to raise cash and that U.S. manufacturing is faring better than expected. The Dow Jones industrial average soared more than 220 points.

“This is one ‘mother’ of a market,” 83-year old market veteran Richard Russell aptly described what market participants were again faced with during the past week. Sentiment was fragile as the outlook was still dominated by the familiar cast of deteriorating economic data, housing woes and concerns about the financial sector.

Phew – what a tumultuous week! Once again, the fall-out of the subprime mess had a lot to do with it. For some variety, however, it was not only financials that were in the limelight, but also commodities that corrected sharply.

Reams of articles and comments have appeared over the past few days on the Bear Stearns debacle. A particularly interesting viewpoint has just been penned by John Mauldin and is republished in this post.

Credit and liquidity issues ravaged the financial markets during the past week and resulted in plenty of white knuckles and shaky knees, climaxing on a particularly sour note on Friday with the Bear Stearns bailout.