If stocks continue to rally in the days ahead, use it as another excellent SELLING opportunity.

World stock markets are extending their bear market rally, and there’s a possibility they could continue to do so for a while longer. If so, don’t be fooled! Why?

Because the drivers behind the rally are artificial, psychological and temporary — the government’s herculean efforts to ease credit conditions, the typical short-covering that comes after a big crash, and the hope, especially among overseas investors, that America’s new president-elect, Barack Obama, can somehow avert a deeper global recession.

But the forces behind the bear market are fundamental and long-term — an economy that’s coming unglued at the seams, a debt collapse that has barely begun, and the worst federal deficit of all time.

No U.S. president, regardless of domestic or overseas popularity, can do much to change the dire economic realities of our time. Nor can he change the fact that …

• A huge new supply of Treasury bonds, falling bond prices, surging interest and a new phase of the debt crisis coming soon.
• If stocks continue to rally in the days ahead, use it as another excellent SELLING opportunity.

Regardless of what the new administration may plan or do, the fact remains that the world’s massive speculative bubbles have burst — in housing, commercial real estate, stock markets, commodities, and, above all, debts.

But all the world’s leaders, with all their radical new measures, cannot put them back together again. Even as the government commits new billions to be spent on financial rescues, trillions in wealth will be wiped out with a sinking economy, sinking real estate, falling stocks, bonds and commodities.

For a while longer, governments all over the world will continue trying everything in their power to stop the fall. They will inject more money into bankrupt banks, broken brokerage firms, endangered insurers and any company they deem essential to the economy. They will pump more resources into real estate markets, credit markets and even stock markets. They will stimulate temporary rallies. They will buy some time.

But no government can repeal the law of gravity and stop investors from selling. No force on Earth can turn back the clock and undo decades of financial sins.

- Sandeep Jain, HBJ Capital