I thought I’d simply talk about this year and what I see for next year instead of the usual newsletter tonight. Nothing has changed with this market, so it’s best to focus on a few other things this evening.

This year was an interesting one because the fed made sure this market wouldn’t crash out. He basically told the world money will be cheap, cheap, and cheaper still under his watch in order to protect the market from collapsing. If the money is out there, it has to go somewhere, so he printed his way to happiness. Give him credit for making sure we hold on to some of our wealth, but it remains to be seen if the house of cards will all come crashing down over time. Most think it was a bad idea to keep QE’ing our way to happiness. You really can’t blame folks, but time will tell whether what he did was appropriate or not.

Japan tried it and it failed miserably. Will it be different here? Only time will tell, but there’s no question we are walking a fine line between a good market and one that we’d rather never see again. Bottom line is, his work held us up for now, and thus, 2010 finishes with roughly an 11% gain. Not bad at all.

What about 2011? I like what I see bigger picture. There will have to be a strong pullback at some point in Q1 based on sentiment, but at least we’ve seen some pullback in bullish behavior this past week. In addition, for now, the economic news is coming in quite well for the bulls. Claims are falling slowly but surely. Manufacturing reports from all over the country are showing some signs of life. The debate of whether that’ll continue rages on, but it seems the market is acting in a fashion that says it believes it will.

I trade, or look out to the future, based on the message the market seems to be sending me. There is risk, of course, as always, but now, more so, as we have to worry still about a double dip recession. We are not out of the woods. We are being artificially propped up by the fed, so there’s always risk when something is manufactured.

It would be nice to see the financial stocks rocket ahead. They are improving, but still nothing to get excited about. The charts are hopeful, however. I think the market will be better in 2011 than it was in 2010, but please remember this: I am not married to any thinking I may have in advance of the trade. If the market says to get bearish I will. I will play what I see. One day at a time is the only way. All that said, I think 2011 will be a strong market year.

Have a perfect New Year!!

Peace,

Jack

 

(Bank of America Corporation (BAC), American International Group, Inc. (AIG), Goldman Sachs (GS), Morgan Stanley (MS), Citigroup, Inc. (C) and several others are ones to watch in the Financial Sector in 2011.)