Stock Market Analysis

Sunday, January 03, 2010

2010 Starts! Looking Back on 2009!

How time flies, its another year again! Let us take a look at how 2009 did together!

In the year of 2009, the Dow gained 20.30%, the S&P500 gained 25.2% and the Nasdaq composite gained a whoopping 46.33%. Yes, the Nasdaq composite is leading as usual due to its more volatile nature, so nothing surprising there. Yes, 2009 has been a year of recovery as I predicted it to be at the end of 2008. Non-skeptics like myself have reaped the benefits of investing (not doubting) in this recovery market with intelligent risk control measures in place. 2009 started with the final down leg of the big bear trend of 2008 and then turned around in Q2 and never looked back. So far, all major indices are more than halfway back up to the pre-crisis highs. This goes to show that there are still more believers than skeptics around.

However, I am of the opinion that January 2010 might end nasty due to profit taking. The market is way overdue an intermediate pullback like the one we saw back in June 2009. The market cannot go up non-stop the way it had. Being in such a short term overbought condition, it has to pullback, ease off that pressure before more upside is possible. However, I am of the opinion also that the market is going to make new highs and even match pre-crisis levels by the end of the year. So, how January ends, so shall the year... NOT.

Right now, the Dow continues to struggle in a short term neutral trend with no signs of a breakout. In fact, the Dow might just head back down to the 10,000 points level before it has any energy to go anywhere higher. This is going to be a heavy weight week with the ISM index on Monday and Jobs Report on Friday (see Stock Market Calendar). The ISM index is already at pre-recession levels, so expecting it to go up any higher is asking a little too much. From this point forward, volatility in the ISM index should be tolerated (although I believe it will still be the excuse for any pullbacks).

For now, the Dow remains in short term neutral trend within an intermediate and primary bull trend.




Chart of Dow Made Using Telechart. Want Your Own Charting Software? Download FREE Now!

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