Bottoming?

I just came back from Hong Kong i have to say i love it there. Everybody is working hard (but not as hard as Japanese) yet still enjoying themselves after a tired day.

I have to say stock market performance around the world last week and this week amazed me. I don't think we have such a bear market rally before, so it could only mean a thing: bottoming?

Seriously, Hang Seng Index today closed at 15575, off the low of 11148. That's around 40% rebound off the low. Nikkei had a low of 6994 and closed today at 8660, a near 24% rebound off low. Kospi had a low of 892 and closed at 1145 today, a 28% rebound. FTSTI off the low of 1473 and closed at 1821 today, 24% off low. ASX off the low of 3201 and closed today at 3573, 12% rebound. Shanghai Composite had a low of 1665 and closed at 2079 today, a 25% jump.

For Eurozone stock market, FTSE had a low of 3665 and now trading at 4378, a 20% rebound. DAX had a low of 4014 andnow trading at 4797, a 20% rebound. CAC had a low of 2838 and now trading at 3307, a 17% jump. SMI had a low of 5034 and now trading at 5781, a 15% rebound.

Dow off the low of 7449 and now trading at 8751, 17% rebound off low. Nasdaq had a low of 1295 and now trading at 1551, a 20% rebound and finally S/P 500 had a low of 741 and now trading at 893, a 20% jump.

From the technical analysis point of view, every single stock market look good in every way. MACD, STO, RSI are pointed upward for every stock market listed here.
Besides, the rally we have now is far higher than any bear market rally we had in history. Most stock market have more than 20% rebound off their low. That's good enough to break any Fibonacci level.

Today we will have a congress vote on auto bailout which everyone knows the big three will win the vote. Another strong day coming?

However, we had this rebound out of nothing! No good news at all during this period of 20th of Nov til now (well if you smart enough to consider auto industry bailout or government stimulus package are good news, then there are two). Every economic data show we should not have a rally.

Plus, most rally is funded by government fund. We can clearly see in Japan, US, Hong Kong and Euro zone where stock market is lifted by derivative market. Derivative market shoot the moon with huge volume enable stock market to follow it and investor/trader start buying stocks.

Furthermore, major short covering activities also contribute to this rally.

We all heard about this crisis as the worst crisis since world war 2 or even Great Depression since we look at economic data and we all believe in Keynesian Economic Theory where Consumption is the biggest contributor to GDP*.

However if we look at economic system as a whole from Austrian School of Economic Theory, we can easily notice situation now is much worse than world war 2 or Great Depression. During that period of time, US dollar was pegged to gold(gold standard) and US is still the biggest creditor nation in this world. So situation back then is much better that way.

FYI, I write this not because I am a USA-hater or I have short the market. I am yet to take my profit on this rally. I just want to warn everyone that when everybody thinks we have the bottom and everything seems to get better, disaster is waiting to struck and make sure you prepare for that.

So do you still think we have a bottom in stock market? think twice!

*For those who are not familiar with Keynesian Economic theory, check it out at http://en.wikipedia.org/wiki/Keynesian_economics

and for those who are not familiar with Austrian School Economic theory, check it out at
http://en.wikipedia.org/wiki/Austrian_School