As of this writing (12:30 PM central on 1/2/09) the DOW is up roughly 4.92% in the last 3 trading days – roughly a gain of 419 points.  In that time nothing has change in the economy, and actually, the news that continues to surface points to bad economic fundamentals.

Just take a look at what has come out in the last three days..

Ford expects an industry wide fall in auto sales of 35% in the month of December, year over year

Manufacturing orders hit a 60 year low

The manufacturing index drops to a 28 year low

Continuing Jobless claims rise in December, point to hard 2009

It is said by many that the stock  market looks forward roughly 6 months. That is to say the price today reflects the economic activity in 6 months.  With the news that is continuing to hit the market, there is no way one can reasonably expect such a quick economic recovery.  I would say that the stock market has moved too far, to fast on no positive data.

This may be due to the new year or because Obama will be taking office in a matter of days, no one can be sure for the 5% move, but I am very wary of such a large advance on no fundamental change in economic forecast.

Update at 3:15PM: The market closed up above 9K, up 6.1% in the last 5 days.  Is this the famed Santa Rally?  Also, Martin Feldstein, Harvard Professor of Economics, believes the economy will be worse off 1 year from now.

Related posts:

1. Nouriel Roubini warns about the current stock market
2. Another Nouriel Roubini stock market and economic warning
3. The Stock Market, AIG and the financial crisis
4. The inauguration, the stock market and other random and unrelated things.
5. Roubini: Stocks Have Risen ‘Too Much, Too Soon, Too Fast’