Is the Market Rally This Past Week Sustainable?

The U.S. stock market appears to have rebounded nicely this past week?
Was it end of month window dressing or an indication that fundamentals are improving?

Here is what we know:

1. Earnings estimates for 2009 are still too high and will need to be revised lower.
2. Job cuts are continuing at a rapid pace and unemployment will continue to grow.
3. Balance sheet deterioration in financials and insurance companies continues.
4. Consumer confidence is at record lows.
5. There is no sign of a bottom in real estate yet.
6. Commodity deflation will effectively lower prices over the next 6 months.
7. Social Security checks will increase 5.8% in January.
8. Private sector workers will most likely get no increase in pay in 2009.
9. A second federal stimulus package will probably be passed in 2009.
10. The Federal Budget deficit will continue to grow enormously in 2009.
11. The strong dollar will make exports less competitive and reduce earnings for multi-national firms in 2009.
12. The U.S. trade deficit may improve in 2009 if imports decline dramatically due to a slowing U.S. economy.
13. Retirements will be delayed by millions of baby boomers in 2009 due to the market losses in 2008.
14. No country in the worls has been immune from the effects of the U.S. credit crisis. We are one world whether people acknowedge it or not.
15. Mutual fund window dressing ends in October. Funds typically sell losers and hold winners that month. Were there any winners to hold on to?
16. The U.S. stock market rebounds typically 6 months prior to any bottom in the economy.

So is the U.S. economy ready to rebound in 2009?
Most likely not.

However, bond yields and dividend yields on stocks are looking very attractive relative to U.S. treasury bonds these days, making these securities more attractive in today's market.

Unfortunately today's market is still requires one to tiptoe and sift through for potential opportunities. Market opportunities found today will require patience as the market recovery will most likely be very slow and drawn out.

So in answer to my title for this post, th market rally this week appears to be sustainable over the long-term, but not so much over the next 6 months.