Tuesday, January 5, 2010

Market Poised for a New Year Rally - The Verdict

Dow gave an encouraging performance on the 1st trading day of 2010, by climbing up 155.8pts or 1.49% to close at 10,584.

Investors were encouraged after the Institute for Supply Management showed a bigger-than-expected uptick in manufacturing activity during December, helped by improving production and ordering activity. Factory employment also showed gradual improvement. Also comforting some were Federal Reserve officials' comments from the weekend that played down the idea of lifting its easy-money policy in early 2010. Nevertheless, Chairman Ben Bernanke said the Fed needs to "remain open" to raising rates to avert or pop future asset bubbles.
Also, the Commerce Department reported U.S. construction spending tumbled in November more than expected, pulled lower by the housing and commercial sectors.

While a 100pts may not really qualify for a rally yet, but what I wish to highlight is the underlying theme that the market will be trading on in the next 2 to 3 months is precisely what we are seeing above - a mixed bag of economic signals that will keep the Fed on the defensive for the short-term.

Yes, an increase in rate in 2010 is a given and the market will on and off factor that in, the real question is now when. Some are saying 2H10 with some even saying 2Q10. My guess is incline toward the 2H, giving the US economy more time to stabilize and show real sign of an upturn.

With that in mind, note too that Crude oil cross $80 yesterday. Winter months in the northern hemisphere is perhaps 1 reason, with the USD weakening as the other. But my guess is that crude oil will only climb higher in 2010, with $100 within sight.

Well, I wish my prayer for a New Year Rally comes true.....and that all of us can make some money from the market this year!


--> Send out before mkt open this morning.
at 1517hr STI is up 20+ pt or 0.75%.

I really hope my clients have entered some trade and make some good money this start of the new year!


This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework as usual.

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