One week to go in the 2010 trading year…

And what a year it has been 🙂  That is, if you like volatility? We have witnessed market swings of 10% or more and in some instances this volatility occurred within a 3 month time period. Nonetheless, it appears that the major indices will end the year with double digit gains or certainly close to it. Seemingly, the economy is also demonstrating stronger signs of recovery as the consumer is spending more and job market gains are occurring. One may think that this should bode well for equities in 2011 and really be a boost to commodities in the new year. However, how much of this is already factored into stocks and commodities?

For me, that question will be answered as companies report their earnings results in 2011 and within those results I will be looking for top-line growth. Yes many of these companies have done exceptionally well this year with their bottom line results, which in turn has increased profits and cash on their balance sheets. However, most of these balance sheet gains have come from management running their companies better and more efficiently which includes higher productivity. However, the negative effect of such efficiencies has been corporate layoffs. So the minute I see consistent top-line growth which includes hiring, I then can get more comfortable in believing that this market rally can continue in 2011.

Have a great week.