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Where’s the Rally?

December 29, 2008 – 10:38 am

There has been very little sign of a Christmas rally and now we are looking for the New Year rally. Traditionally, these rallies come in the last couple weeks of December and the first couple weeks in January. However, this has been a year of non traditional moves for the market.  

It has been the worst year for the S&P 500 and Nasdaq indexes including the great depression. For the DOW it has been the second worst, but just barely. Even though prices of stocks are at historic lows, when compared to price to sales, price to book and other financial relationships it does not mean the market ‘has’ to rally at year end.  

Sometime in the new year we are going to see a very strong rally, but that may be several months away. No one can predict the timing of a rally or a fall in the market. However, there are huge amounts of cash sitting on the sidelines, but even if it just sits there for a while you have consumers who are finally getting a break at the gas pump with very low prices for gasoline, historic low mortgage rates, and the Obama stimulus package.  

All these factors should give us a strong rally. The biggest fear is that there is some unknown or unknowable event that could panic investors. A little hint of that kind of thing are Israeli air strikes this weekend with oil prices spiking as a result. The rally is assured but it is the ‘when’ that is always impossible to gauge.   

Good Trading
Steve Peasley 

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