What's with this market rally?

All the market pundits are wondering just what is driving this market. It is common to look at the markets most recent movement and look for a piece of news that just might explain a rally or a decline.

We would suggest that maybe it is not new factors that can explain the recent rally but what the market has missed for the past +7 months. The S&P 500 is at the same level today that it was in late April, no gain. But during that seven months of backing and filling for the market GAAP earnings for the S&P 500 have risen +17%.

For the year 2010, it is expected earnings will top $74, a 45% increase over 2009. But the market has risen just under 10%.

Maybe the answer for the market’s recent strength is simply that prices are starting to catch up with earnings growth!
Whatever the reason, sit back and enjoy the rally.