The recent market rally seems to have stalled. Is it because the Institute for Supply Management’s index of national factory activity declined in September? Is it because U.S. Auto sales dropped again, once the artificial stimulus ended? Is it because the unemployment claims rose unexpectedly again? Is it because the consumer confidence index fell? Or is it because the Dow was getting close to breaking the psychological barrier of 10,000?

Personally, I think it’s all of the above – and more.

I think that the recent rally has largely been due to the realization that the economy is not going off a cliff, and it is not going the way of the that of the USSR after its breakup. It’s a sudden elation that we’ve hit bottom, and the sun still rises and life goes on. In other words, it’s not based of fundamentals.

It may appear on the surface that it’s the fundamentals. After all, corporations are posting some increases in earnings, or less loss of earnings. But compared to what? Compared to 2008, you’d almost have to post big improvements, wouldn’t you? The recent earnings are really a reflection that things in 2009 aren’t as bad as the end of 2008. But is that the same thing as “good”?

What’s going to happen in the next 6-12 months? What are corporate earnings going to look like then? See, I think the market is considering this and it’s manifesting itself in this rally’s pause.

Investors are looking ahead to that 6-12 month time frame, and they’re not sure they see much real economic growth. Maybe I’m wrong, but there’s a lot of unknowns that are coming down the pike, like how much are consumer credit losses going to be, or what happens to the housing market when all those ARMs reset. How much will banks lose when commercial real estate loans start defaulting?

The job market isn’t showing any signs of turning around, and if consumers don’t have jobs, they don’t have incomes. And if credit is hard to come by, or the consumer is just plain gun-shy when it comes to borrowing, they aren’t likely to increase spending.

Time will tell, but I’m getting the sense that the market is returning to a more rational place, and starting to question the “green shoots” hype.

• Mutual Fund Monday: PIMCO Launching New Global Fund. According to a recent Edgar filing , PIMCO will soon be launching a new fund: PIMCO Global Opportunities Fund . It's going to be a global value fund of common and preferred stock. The fund will target equities in one of 3 countries, one of which may be the U.S........
• Diversification Is A Scam, Really? I came across a quote by Jim Rogers in SmartMoney magazine yesterday that almost made me blow my chocolate milk out my nose when I read it. In this interview, Mr Rogers says: "Diversification is something that stock brokers came up with to protect themselves, so they wouldn't get sued.......
• 2010: The year of the ROTH. This is a friendly reminder for anyone with retirement savings who is concerned about paying higher taxes in retirement: new tax rules remove earnings limits on Roth IRAs. Prior to the start of 2010, you could not open a Roth IRA if: Your individual adjusted gross income was $120,000 or......
• Another Market Crash Coming for 2010? (VIDEO). Stock market analyst Robert Prechter is seeing what he calls "the Biggest Bubble in History", and that's not a good thing for investors. According to The Wall Street Journal, Prechter told the Society of Technical Analysts in London that we are in the midst of a "grand, super-cycle top" and......
• Why you Should Keep a Close Watch On Your Stops. Aaron Task at Yahoo! Tech Ticker has a post of the 5 Keys to the Market, from Todd Harrison, CEO of Minyanville.com. The money quote is near the bottom: "Given these crosscurrents, Harrison's advice for traders is to keep a tight leash on stops and be extra focused on risk......

• Damn usary laws I was about to lend another investor $15k at 3% interest per month with a 6 month ballon or an extension with a 6% penalty but the escrow company told me that its against texas's usary laws!I spoke to a broker and he said there are ways around it but......
• Ask The M-Network: Where Is The Best Place To Save & Grow Cash? My Two Dollars reader Kelly sent in the following question to the M-Network's new feature "Ask The M-Network": "My husband and I currently have 30K in savings and put in 2500 a month into a HSBC Online account paying about 2.4% currently. Is this the best place to save or......
• Are Stocks Better Than Other Investments? There's always someone at a party who's claiming their investment asset of choices is the best. In 1999, it was stocks. In 2005, it was real estate. Right now, I'm claiming its Canadian Income Funds and commodities like gold. But is there an investment that's actually better than something else?......
• Getting Rich While Paying Debt Off One of the wisest things that you can possibly do this year, if you are not already doing it, is to become debt free. Here is something that you may not currently be aware of: Gaining a control over your finances that you did not previously have could actually make......
• What's Gone Wrong With Municipal Bond Funds? Many investors preparing for retirement have become concerned about the drop in market value of municipal bonds and funds in 2008 and 2009. Let's take a closer look. Historical Benefits of Municipal Bonds and Funds Earlier in 2008, municipal bond mutual funds (a/k/a munis) were very attractive to baby boomers......