The European headlines faded from the front page despite of Greek bond write down negotiation impasse.
The Italian 10 year bond yield has receded from its all time high, for now.
IMF said they are cutting global growth forecast from 4% to 3.3%, the contraction is mainly coming from the Eurozone. 3 plus % is still a very good number.
Even the bearish guy like Hussman is changing his tone that at least taking some of the hedges off in view of economic data stabilization. The main logic behind that is formed on the basis of central bankers intervention.
The old argument of relative return is coming back. Equity yield is more attractive than government bond yield.
That will encourage speculators to come to play, at least at the very short term. The Dow Jones Industrial Average is about to challenge the last year's all time high. The strong counter-rally is a response of the stock markets acknowledging they were wrong. The world did not go into abyss and Lehman II scenario has been taken off the table, for now.
Even Dr. Doom, Marc Faber, echoed this view.
Stock markets have already discounted "some very bad news" and there is no reason to fear stocks will sink, despite gloomy prospects for the global economy, Marc Faber, publisher and editor of the Gloom Boom & Doom Report, told CNBC on Thursday.
"My view is simply: relax. I don’t think that equities will collapse. I think we have major support going back to August 2010 when the S&P was at 1010," Faber said.
Just over a year later, the S&P briefly dropped to a low of 1074 on October 4, 2011, he said.
"We have a lot of support around 1100, and if the S&P drops 200 points, I guarantee you the Fed will come in with QE3 and QE4 and so forth," he said, referring to a next round of quantitative easing by the Federal Reserve.
The cyclical sector like semiconductor, in many views, is likely to turn up due to low inventory level.
It was reported in the Star this morning too. The chip sector expect to recover by Q2 '12.
Am I ready to change my bearish stance? Not yet. Being bearish and bullish at the wrong time can be costly in a side way market. It has cost me 10 points gain when I turned very bearish in October, I was precisely wrong when I should have stuck to my bullish stance. Now that it has gone to the top of the next resistance, I should continue to maintain my bearish stance. I will move some money out in the next sell off.