US Market Summary 2006 & Our Stock Market Wish List 2007
HAPPY & PROSPEROUS 2007 EVERYONE!
2006 has come to an end and with a surprise market close on Tuesday, all traders can enjoy a 4 days market holiday and party into 2007.
2006 has been the year that all equity traders has been waiting for for years. After almost 6 sideways years, the Dow and Nasdaq broke to upside in 2006 to close up by 15.44% and 8.36% respectively. The main mover for the year of 2006 has definitely been the continued interest rate pause by the Feds and the crude oil correction. These 2 factors, along with measures to bring about a soft landing in housing prices, led to a full scale rally since August 2006.
2006 hasn't been a year of all ups and no downs. May 2006 has been a pretty scary month as the markets went into a slight correction on uncertain geopolitical situation. That correction continued into the surprising rally in August. Well, that is how the market tend to behave over the past hundreds of years; Against All Expectations. When you think it is thinking one way, it suddenly behaves in another.
2006 has also been a year that challenged the US Economy; Challenging crude oil situation, widening national debt, widening trade deficit, uncertainty in the middle east... etc. Through it all, investors all over the world continued to believe in the future of the US markets, which showed up in the August rally.
2007 to 2008 will be very important years for the US markets. The first of the baby boomers will start to withdraw their 104K from their funds, thus the equity markets, from the end of 2007 and going into full scale from 2008 onwards. These money pooled by the most significant post war population formed an important source of liquidity for the US markets. We can all imagine what will happen when such a full scale withdrawal happens. I do not think the SEC and the Fed will allow something so powerful to happen all at once. Let's see what new policies will come onto the table in 2007 pertaining to this issue.
When the markets open on Wednesday, there is a high chance that we should see a change in sentiment in the US markets. Over the past 10 years, there were 5 years where the Dow ended higher on December. 3 out of that 5 years see a drop on the following January and 1 out of that 5 years see a small gain on January and then going into slight correction. With the Dow and Nasdaq composite showing signs of fatigue towards the end of December 2006, it does seem like a pretty uncertain opening for the markets on Wednesday. Even though the short term outlook may be pretty uncertain at this point, the long term outlook looks a lot more promise. With the Dow bouncing from the correction on 2003, it has been moving up and up for the last 4 years. As the saying goes, "The Trend Is Your Friend", it certainly makes no sense to say that the locomotive will suddenly scratch to a stop this year. Nasdaq is also making the great climb up the Himalayans in order to recover from the 2000 Tech crash. With still no bubbling evident in the tech sector, the rally since 2003 is a healthy one and one which should be expected to continue.
With interest rates and oil prices remaining stable, we should see another 3.5 to 4% growth in the US economy in 2007 and even though a great economy is no promise of a great stock market, a sour economy is certainly promise for a sour stock market.
So, our wish list for the year 2007 would be:
1. To see policies made and executed to prevent the baby boomer crash.
2. To see policies made and executed to reduce trade deficit and national debt.
3. To see oil prices remain stable. (to see it falling further is a little wishful with OPEC right on its heels)
4. To see the housing market come to a soft landing.
5. To see confidence coming back into the equity markets from the bond markets.
6. To see an interest rate cut right about March 2007.
7. To see the US dollar come to a support level where the US economy can remain competitive against a rising China.
8. To see less turbulence in the middle east.
9. To see worldwide terrorist network broken down.
10. To see more mergers between strong US corporations with foreign corporations.
If my wishes can come true, then I am confident that our long term portfolio should remain long. :)
HAVE A PROSPEROUS YEAR 2007 IN THE MARKETS!
2006 has come to an end and with a surprise market close on Tuesday, all traders can enjoy a 4 days market holiday and party into 2007.
2006 has been the year that all equity traders has been waiting for for years. After almost 6 sideways years, the Dow and Nasdaq broke to upside in 2006 to close up by 15.44% and 8.36% respectively. The main mover for the year of 2006 has definitely been the continued interest rate pause by the Feds and the crude oil correction. These 2 factors, along with measures to bring about a soft landing in housing prices, led to a full scale rally since August 2006.
2006 hasn't been a year of all ups and no downs. May 2006 has been a pretty scary month as the markets went into a slight correction on uncertain geopolitical situation. That correction continued into the surprising rally in August. Well, that is how the market tend to behave over the past hundreds of years; Against All Expectations. When you think it is thinking one way, it suddenly behaves in another.
2006 has also been a year that challenged the US Economy; Challenging crude oil situation, widening national debt, widening trade deficit, uncertainty in the middle east... etc. Through it all, investors all over the world continued to believe in the future of the US markets, which showed up in the August rally.
2007 to 2008 will be very important years for the US markets. The first of the baby boomers will start to withdraw their 104K from their funds, thus the equity markets, from the end of 2007 and going into full scale from 2008 onwards. These money pooled by the most significant post war population formed an important source of liquidity for the US markets. We can all imagine what will happen when such a full scale withdrawal happens. I do not think the SEC and the Fed will allow something so powerful to happen all at once. Let's see what new policies will come onto the table in 2007 pertaining to this issue.
When the markets open on Wednesday, there is a high chance that we should see a change in sentiment in the US markets. Over the past 10 years, there were 5 years where the Dow ended higher on December. 3 out of that 5 years see a drop on the following January and 1 out of that 5 years see a small gain on January and then going into slight correction. With the Dow and Nasdaq composite showing signs of fatigue towards the end of December 2006, it does seem like a pretty uncertain opening for the markets on Wednesday. Even though the short term outlook may be pretty uncertain at this point, the long term outlook looks a lot more promise. With the Dow bouncing from the correction on 2003, it has been moving up and up for the last 4 years. As the saying goes, "The Trend Is Your Friend", it certainly makes no sense to say that the locomotive will suddenly scratch to a stop this year. Nasdaq is also making the great climb up the Himalayans in order to recover from the 2000 Tech crash. With still no bubbling evident in the tech sector, the rally since 2003 is a healthy one and one which should be expected to continue.
With interest rates and oil prices remaining stable, we should see another 3.5 to 4% growth in the US economy in 2007 and even though a great economy is no promise of a great stock market, a sour economy is certainly promise for a sour stock market.
So, our wish list for the year 2007 would be:
1. To see policies made and executed to prevent the baby boomer crash.
2. To see policies made and executed to reduce trade deficit and national debt.
3. To see oil prices remain stable. (to see it falling further is a little wishful with OPEC right on its heels)
4. To see the housing market come to a soft landing.
5. To see confidence coming back into the equity markets from the bond markets.
6. To see an interest rate cut right about March 2007.
7. To see the US dollar come to a support level where the US economy can remain competitive against a rising China.
8. To see less turbulence in the middle east.
9. To see worldwide terrorist network broken down.
10. To see more mergers between strong US corporations with foreign corporations.
If my wishes can come true, then I am confident that our long term portfolio should remain long. :)
HAVE A PROSPEROUS YEAR 2007 IN THE MARKETS!
Labels: fundamental analysis, investment, share market, stock market, stocks, technical analysis
posted by Jason Ng at 7:45 PM
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