Happy New Year everyone. Here is my market preview for the first week of 2011.
The S&P 500 cash index (SPX) closed at 1257.64 on Friday, up 0.87 points for the week; the final tally for the year 2010 shows a gain of about 13%. The NASDAQ gained 17% and the Dow gained around 11%.
In 2010 all three major indices made double-digit gains for the year, mainly led by strong performances from the consumer discretionary, transportation, commodities and real estate sectors. The notable underperformer was treasury bonds. The declining bond price brought retail investors back into the stock market late in 2010. If this trend continues, the stock market will be more favorable in the New Year.
In the long run, U.S equities should remain bullish. In the short term, a pullback at the beginning of the year has a large chance. But this pullback will not last very long, just a brief period.
SPX weekly chart
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