December 7, 2010
Dear Investor,
I was keeping an eye on the markets here and there on my smartphone while my 3 ladies were in the bathroom (Is it my imagination or do they go A LOT more than men? 😉 What I saw was a slew of strong economic reports show investors what I have been saying all along. We do have an economic recovery. In fact, it seems to be gaining a little momentum. This fresh round of news has sparked a holiday rally the past few sessions that I think has more legs. Yes, it’s true the November Employment situation report was underwhelming to say the least. But that can be a volatile report prone to big revisions later on. I just sense that from all the other employment indicators we are finally moving in the right direction, no matter what Friday’s report says.
Here we are again. Everything is great unless something blows up (Europe, Banks, Terrorist Attack). Unfortunately this unholy triumvirate is no less real and that is why I can’t advocate being 100% long right now. More like 85%.
So what might a holiday rally look like? I saw a poll which said 34% of folks expect us to hit Dow 12,000 by year’s end. That would be wonderful, but perhaps a tad too optimistic. I suspect we will push through the recent highs at 11,500 and perhaps tack on another 2-3% by the end of the month. That would equate to a 12-13% return on the year. Not bad given that we were under Dow 10,000 in August.
Sheraz Mian
Zacks Investment Research
