I love watching movie re-runs and the stock market seems like a re-run of last year.

"A sixth consecutive week of negative returns in the US." This is the headline you will read over this weekend. Longest negative streak in 2002. The Dow cracked the psychologically important 12000 point mark. The S&P500 broke the first level of support of 1293 points. Man those bear market prophets are going to have a field day once again.

Plenty of theories are being passed around on why the market is dropping like that. The funny thing is, none of them sound convincing. So I am not even going to be bothered about writing about them.

So in order to think through things more carefully, I went to check back on the market levels before QE2 was announced. The Dow was at 11192 points, so we have given back half the gains from the positive sentiment after QE2. What levels should we wait till before buying into the market? Do you expect the market to give back all its gains before climbing back in? The US market has led the rally over the past 7 months of QE2, rising more than 14% and so far it has given back a little more than 7%. The best equity market performer so far this year is the US and now it is close to giving back all its gains. It is funny how the market works. Taking a nice gradual rise over 6 months and taking only 6 weeks to lose most of it back.

I was bearish on the market in April and now I am getting more and more bullish as the days go by.

Remember a year ago the stock market fell into a a depressive state buffeted by troubles in Greece, worries about a double-dip in the US economy, and the proclaimations by many analysts that the Federal Reserve was powerless to stimulate growth.

Reading the headlines recently and watching the recent activity in the stock market, I cannot help but get the feeling that we've seen this movie before. Greece is still in danger of default; economic growth in the US slowed in the first quarter; and the Fed has just announced that QE2 will end soon.

In the end stocks reversed their 2010 April-June tailspin and recovered to close over 15% higher on the year. Those investors who sold out in the midst of all the negativity in summer missed a terrific year for stocks.

One clue that stocks, and for that matter the economy, were not headed for a double dip was the fact that actual reported earnings were moving sharply higher.

In short, the picture for mid-June 2011 is similar to mid-June 2010. Stocks are selling off, while actual earnings, and analysts' year-end earnings estimates are continuing to rise.

If corporate earnings continue to be strong, as I believe they will, I believe that stock market activity in 2011 might turn out to be a re-run of a movie that we have seen before down in the summer, up by year-end.

Have a good trading week ahead! Accumulate on weakness.

Best,

SVI