I have been very cautious about the stock market since its meteoric rise from March lows. The economic recovery will be slow and tedious and will most definitely not support this 40%+ stock market growth over the past 6 months and is due for a correction. Already we are seeing oil prices and gold fall. Soon enough, the market will endure a correction and I believe it will be led by the banks and energy companies. The fundamentals just aren’t in place to support the prevailing P/E ratios being paid for the major indices

The wildcard right now is inflation and the value of the dollar. I find it hard to believe that inflation is a non-issue considering the trillions of dollars the government must raise to finance the ballooning budget deficit.

The way this plays out should be interesting to watch and I believe most sectors will be correcting downward through the end of 2009 as the economic recovery forecast becomes weaker and weaker.

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