This is the proverbial $64,000 question, and, as such no one really has an
answer to it, but, what is available for discussion are the market metrics.
Market metrics can illustrate to us what the general direction is of the
markets and allows us to make informed decisions on entry or exit.
At first glance, the markets look pretty strong with global markets on the
rise but what is truly driving the engine behind the markets? Should investors
be concerned?
When stock markets began their improbable ascent in March the bull market was
in its infancy and we had a wide variety of companies on the indices participate
in the upward move, so much so that the juniors had begun to lead the way as
investors had laid bets on to lead as they believed that the economy was
improving. Today, some of these junior companies are beginning to slow in
achieving new highs and has some pundits calling the conclusion to the bull
market, however, other pundits believe that this is a normal coarse of base
lining (accumulating and forming new levels) and that there will be a
continuation of the bull market that started in March.
What will allow us to gleam a sense of direction for 2010 markets, above the
basic metrics, will be what happens in the last two weeks of December and the
first two of January with trading volumes and overall direction of the market.
If volumes are high and the markets end positive for 2009 then there is a strong
likelihood that the first two weeks of January 2010 will also be positive with
high trading volumes.
If the above does hold true, then we can expect that the first half of 2010
will be positive with concerns being pushed back to the ladder half of 2010 when
global economies and companies will have to fend for themselves without the
benefit of Government Spending. It is only then that investors will see how
strong the economy and stock markets really are. If companies do not have sound
fundamentals, sans government stimulus, then there will be a backlash by
investors
and a huge sell off will likely happen.
Investors today are incredibly fickle and we can see the results form Fridays
fantastic job reports that left investors unmoved by it as they sold off the
market and with this I suggest that further credence to base lining or
accumulation is happening. With that said, investors cannot lose sight of the
potential hurdles mentioned above and should be guarded in their optimism going
forward.
So, is the bull market showing signs of fatigue? No, I do not think so, as I
see more signs of accumulation rather than selling, but if the last two weeks of
the year do not end in a strong fashion then we may very well be in for a rough
2010...
These were just some thoughts from me, so, have a great day.
