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Trends and Hopes

January 5, 2010 – 8:57 am

Happy New Year!  As 2010 trading kicks off we have a strong snap back from Thursday’s 100 point drop for the last trading day of the year. There was no Santa Claus rally for the last week of trading in 2009 which punctuated a year in which the normal patterns seen over many years were disrupted. It is very common to have a Christmas rally but not this time. Also, the first three months of the year are usually positive but not for 2009; the market fell 25%. Then we had no summer correction unless you call a 7% fall in June the summer correction. Normally the last three months of the year are strong. In 2009 they were flat with a slight upward tilt in December.

What will the new year bring? Of course the odds are a return to the norm and that means a positive start of the year. However, we are in anything but normal economic times so the new norm might be very different than the past trends. We are all going to have to be very diligent.

For at least this morning a rally appears to be the story of the day but it is early and one day means very little. There is an old saying that ‘as goes the first trading day in January so goes the week, the month and the year’. So in normal times if we rally the first day, the week will be positive. If the week is positive then the month generally is up and if that is true the year is an up year.

But again are we in normal times? I tend to doubt that.

Good Trading
Steve Peasley

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