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Tendencies and Old Sayings

December 23, 2011 – 6:20 pm

The light trading volume rally this week is being helped by better economic numbers and a lack of bad news coming out of Europe. That bad news may well be short lived but it is a pleasant relief.

The shortened week next week and the first week of the New Year will also have light volume. We won’t get a good read on stock direction and strength of that direction until the second week of January and that will coincide with the beginning of earnings season.

Historically, for the stock market, there is an old saying that tends to be true: ‘as goes the month of January so goes the year’. Last year January was positive but only by a very small amount. So far this year the market is down but just barely with a strong possibility that next week, the last week of the year, if the rally continues, the year will end on the up side, but just like last January it will be just barely.

The predictability of the market is not only difficult it is impossible on a short term basis. Long term (meaning years), it goes up. But the old saying sometimes gets it right. That is why those old sayings exist; they tend to be true. Another tendency is for the market to rally this time of the year. But of course there are always exceptions.

One thing is for certain: we will have volatility. In that sense 2012 will be little different than 2011.

Good Trading
Steve Peasley

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