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Stocks in Strongest Bull Market Since WWII
Stocks hit their highest level since this rally began 20 months ago on Fed Chairman Ben Bernanke’s extraordinary plan to purchase Treasury securities for a second time, ensuring low interest rates for the foreseeable future. What investors may not realize is that this is now the strongest bull market for equities since 1945.

Through 605 days, the S&P 500 [.SPX 1221.06 23.10 (+1.93%) ] is up more than 80 percent from its credit-crisis low reached on March 9, 2009, the biggest advance at that stage among any of the bull markets since World War II, according to Birinyi Associates. The next most powerful bull began in 1974 and was up just 61 percent through the very same time period.
“While we would advise caution on new buys at these levels, it remains clear that equity investors are in the midst of a multi-year bull market,” said Birinyi analyst Cleve Reuckert, in a note. The firm has been steadfastly bullish throughout the rally and also correctly called the summer pullback just that, a correction.

The S&P 500 is 9.5 percent higher in 2010 now, led by gains in consumer, industrial, commodity and technology shares, all beneficiaries of either low interest rates, greater liquidity or a falling US dollar [DXC1 75.96 -0.04 (-0.05%) ]. The dollar touched its lowest level this year versus a basket of other currencies.

But while this may be the best bull market since World War II, those trading this market certainly don’t feel like the ‘Greatest Generation’ of investors.

“The game is changed,” said Sal Arnuk, a partner of Themis Trading and critic of the computer trading that usually accounts for the majority of activity today. “Stock fundamentals are not as important as figuring out what the Fed will do, and front running it. The only caveat I would add, is that playing that game of chicken requires that the government will do what it says it will do.”

After the collapse of Lehman Brothers and the so-called "flash crash" this May, retail investors aren’t quite ready to take that gamble. Stock funds posted an outflow of $11.16 billion in September, while flows into bond funds increased by $26 billion, according to the latest statistics from the Investment Company Institute.

Despite the monster gains off the bottom, the S&P 500 is still just at the highest level since September 2008. It will take another bull market, or gains of more than 20 percent, to get it back near its all-time high reached in October 2007.

While this bull market certainly has its share of individual comeback stories such as Apple [AAPL 318.27 5.47 (+1.75%) ], Ford [F 15.86 0.68 (+4.48%) ] and Caterpillar [CAT 83.18 3.30 (+4.13%) ], investors do not have the same good feeling as when the housing or technology bull markets progressed. Maybe that’s the point.

“Historical comparisons are tough to make,” said Peter Boockvar, equity strategist at Miller Tabak. “At the same time the Fed has printed more money than it’s ever had. If only this bull was based on the true economic fundamentals.”
http://www.cnbc.com/id/40016939?__source=yahoo|headline|quote|text|&par=yahoo

Dow back to pre-Lehman level
Commentary: The Dow might be there but the world is not the same
By MarketWatch

NEW YORK (MarketWatch) — So the Dow Jones Industrial Average is back where it was just before Lehman Brothers filed for bankruptcy more than two years ago.

After a 219-point rally on Thursday, the Dow /quotes/comstock/10w!i:dji/delayed (DJIA 11,435, +219.71, +1.96%) closed at 11,434, or 13 points above its closing level on Friday Sept. 12, 2008.

The ride from then to now, of course, involved a slide that brought the Dow all the way down to 6,547 on March 9, 2009, or a 42% slide in less than six months. The ride back up, as usual, was much harder, taking a year and a half.
Meanwhile, the S&P 500 index /quotes/comstock/21z!i1:in\x (SPX 1,221, +23.10, +1.93%) , which market pros prefer as a gauge of the broad U.S. stock market, remains 30 points below its close on Sept.12, 2009.

There are other eerie signs that would suggest things are, almost, back to where they were two years ago.

In spite of all the cries about the death of the dollar, the dollar index /quotes/comstock/11j!i:dxy0 (DXY 75.85, -0.03, -0.05%) , which measures the U.S. unit against six major currencies, is close to the 76 level. It was at 79 back then. The euro, at $1.41 back then, barely trades above $1.42 right now.

Then, there are the signs that remind us the world is different now than it was back then.

Gold, which traded slightly above $760 an ounce two years ago, has rallied nearly 65% to trade above $1,390 an ounce.

That signals all the distrust markets have for currencies while major central banks, starting with the Federal Reserve, have tried to reflate the financial system and boost their economies.

Then there are the more telling signs about the economy from the markets: Crude oil, although it topped $86 on Thursday, remains 15% below its level of two years ago, when it traded above $100 a barrel.

And then there are yields on long-term government bonds, which normally act as proxies for future economic growth and inflation. The yield on a 10-year Treasury /quotes/comstock/31*!ust10y (UST10Y 2.49, -.00, -0.08%) is now at 2.5%, compared to 3.7% back then.

The Dow’s strong gains since August have taken place as investors have used the Fed’s easing monetary policy to purchase risk assets. But the U.S. economy remains in the dumps, with unemployment at 9.6%.

Of course, what might be back to normal, or at least to the good ol’ days that preceded Lehman’s collapse, are good omens for Wall Street and for financials, which used to be the market’s leaders.

Thursday’s rally, after all, came only one day after the Fed promised to deliver another $600 billion, and two days after Republicans won back enough seats in Congress to fight fresh financial reforms and to keep tax-breaks for the rich and on capital gains.

Is it any wonder that the Dow’s two best performers Thursday were Bank of America /quotes/comstock/13*!bac/quotes/nls/bac (BAC 12.11, -0.02, -0.17%) , up 5.3%, and J.P. Morgan Chase /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 39.70, -0.10, -0.25%) , up 5.5%?

— Nick Godt
http://www.marketwatch.com/story/dow-back-to-pre-lehman-level-2010-11-04?siteid=yhoof