The book is closed on 2010 and what a year it was! The final numbers are in: the Dow Jones Industrials gained 11%, the S&P 500 gained 12.8%, and the Nasdaq gained a whopping 16.9%. Congratulations to all of the bulls out there.

So how will equities fare in 2011? Could there be an encore performance in stocks? In my humble opinion, for the markets to have a repeat performance, we must see the unemployment rate come down significantly. This means corporations must be willing to hire and expand, enabling the consumer to start spending again. These three catalysts are essential for a meaningful economic recovery and to keep the markets appreciating.

Have a great trading and investing new year.

~George

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.

~George

The Dow, S & P and Nasdaq all hit new 52 week highs today. In fact the S & P 500 closed at its highest mark since September 2008. What does all of this mean? Could this be the result of year end window dressing? Now that the S&P 500 has closed above 1250, could this be the technical breakout that everyone has been looking for? Or could this be the result of a bullish call today from the chairman of asset management at Goldman calling that 2011 could be the “Year of USA”?

I think it’s a combination of all of the above and then some. I know it is hard to believe that with the economy continuing to struggle and with the incessant high unemployment rate that America continues to endure, you ask yourself, how can stocks continue to lift? Let us not forget that markets tend to be forward-looking mechanisms and just maybe 2011 will become the “Year of USA”.

Have a great evening.

~George

Stocks continue to head higher as we close out the trading week with the Dow, Nasdaq and S&P 500 all flirting with 52 week highs. To add fuel to the fire after the bell Oracle Corp. (NasdaqGS: ORCL) reported their earnings with total revenues up 47% and a whopping $1.87 billion in profits. This should bode well for the Nasdaq tomorrow and keep the rally in techs going. Not only are the large caps performing well this year, but the small cap marketplace is actually outperforming their brethren. The Russell 2000 Index a small cap barometer is up over 20% year to date in yet another sign of optimism in the overall markets.

If you have been long this market congratulations for you have been on the right side of the trade for sometime now. Let’s see how this year wraps up and see if this powerful rally continues through the holidays.

Have a great weekend,

~George

Equities for the most part this year have enjoyed very impressive gains especially in the commodity space and in tech land. So with 3 trading weeks left in the year and with Christmas and New Year’s affecting the trading mix, how much higher can stocks go? Technically speaking if you take a look at the S&P 500 the broadest index of the big 3 you can see from the chart it is in a potential breakout mode, the same rings true with the Nasdaq, and the Dow appears to be setting up for a breakout as well. What this perma bull needs to see is significant volume in order to confirm a breakout. With the holidays approching typically volumes ebb, however if the markets are able to experience a big volume day to the upside, this would confirm the breakout and we then could be in for a real Santa Clause rally 🙂 Let’s see what happens and good luck to all.

Have a great week.

~George

Americans spoke out with conviction a month ago as the House of Representatives witnessed an historic land slide, the state governorships were also a landslide, the Republicans and businesses got what they wanted and they almost got the Senate too. Obama seemingly has struck a deal with the GOP on extending the Bush tax cuts for all Americans, this is all great news for businesses, the job market and expansion, right? Absolutely! Congratulations to Washington and America for taking a huge step in the right direction, but where is the huge market rally you may ask? Why aren’t we making new multi-year highs in equities and the like? Let’s put this into perspective. So far this year the markets have already notched double digits gains with incredible volatility and most likely if none of the above occurred, we could be talking about a very different market environment, as in Dow, S&P and Nasdaq possibly down 20% or more?

My takeaway is the changes that have indeed taken place from a policy standpoint and of course politically, could be the one-two knockout punch to unemployment and the fuel for corporate confidence and subsequent expansion. So I am not worried about the market churning right now and I think that patience is the name of the game.

All the best.

~George

Equities closed the week on a high note despite the unemployment rate rising to 9.8% and the private sector only adding 39,000 jobs. I have been speaking for months now on how resilient the markets have been despite the economic concerns here and abroad. Right now there is simply no fear to buy and hold stocks. One metric to get this “no fear” confirmation is the VIX index. The VIX since early July has fallen nearly 50% and with this type of optimism it’s no wonder that even with bad news the markets keep marching northward.

So what does one do now? Short term I do not see any reason for this momentum to not continue especially when the anticipated year end window dressing occurs by some funds and managers. Over the longer term one has got to believe that at some point job growth and economic expansion will need to replace the accommodative policies and zero based capital offered by the Fed. Not sure this will happen in 2011, but hopefully soon thereafter.

Have a great week 🙂

~George

Stocks soared on the first trading day of December with the Dow, S&P 500 and Nasdaq all posting gains of over 2%. The rally started with reports that the private sector posted its largest gains in employment in 3 years and that manufacturing continues to grow here and abroad. Even global stocks surged on reports that the European Central Bank may be close to containing the financial crisis that currently exists across the pond. Today’s reports follows weeks of market volatility and losses, however each time the markets have pulled back it has been met with undeniable support which over the long term is very bullish.

In my humble opinion job growth in the private sector is critical in order for this economy to not only get its footing but to grow again in a consistent manner. In Washington there is talk about extending the Bush tax cuts across the board,  and if that happens I believe private sector job growth would accelerate in a meaningful way and the stock market could potentially begin to make new multi-year highs. Let’s keep our fingers crossed that the policy-makers in Washington takes this pro-growth approach.

Have a good evening.

~George

This has been one of the most volatile years in equities and commodities that I have seen in quite some time and I can only hope that the month of December brings some stability to the marketplace. The S&P 500 is up almost 10% so far this year but not before we have witnessed plunges of 16% with rebounds of 9% and that is just since April , whew not for the faint of heart. Even if you are a long term investor these types of market extremes are not easy to endure. As the year winds down the $million dollar question now is, are stocks overvalued? While corporate profits as a whole have been very impressive this year and 2011 portends to be another growth year for corporate earnings, one has to ask have the markets gotten ahead of itself? My view is as long as their are concerns about the economy, the housing market and Europe we will continue to see volatility in equities and in some instances extreme volatility. However I continue to expect support on pullbacks and healthy corrections which has been the pattern for most of the year.

Have a great week.

~George

Once again equities were very resilient today with the Dow coming back from down almost 150 points to closing only slightly lower along with the S&P 500.  The Nasdaq actually posting a modest gain up 13.90 for the day. I don’t expect to see too many fireworks this holiday shortened trading week, however with the inherent light volumes that are associated with the holiday period some volatility can occur. Good luck to all.

I wish everyone a very safe and happy Thanksgiving holiday.

All the best,

~George