Santa appears to be on his way. We’re not there yet, but let’s hope it’s soon. The charts of some of the key stock indices continue to look positive and point to more potential gains after the break at the previous chart tops. I’m encouraged by the ability of the major stock indices to edge higher after breaking the previous chart tops.
Small-cap companies will be the leader this year followed by technology, which was something I had suggested at the beginning of 2010. Small-caps continue to outperform, with the Russell 2000 up over 24% this year and above its previous high of 745.
Large-cap technology continues to show encouraging signs towards tech spending.
Following strong results from Research In Motion Limited (NASDAQ/RIMM) and Oracle Corporation (NASDAQ/ORCL), Adobe Systems Incorporated (NASDAQ/ADBE) beat revenue and earnings per share estimates.
I expect tech and small-caps to drive trading again in 2011. I will provide my commentary and predictions for 2011 within the next few weeks.
Banks are also providing some leadership. Wall Street is also jumping on the bull.
The Bank of America is the latest Wall Street firm to suggest strong moves for the S&P 500 in 2011. It expects the S&P 500 to trade at 1,400 in a year driven by technology and energy.
Previous estimates were:
J.P. Morgan: 1,425
Barclay Capital: 1,420
Goldman Sachs: 1,450
The news domestically continues to be encouraging.
Subject to heavy debate and compromise, President Barack Obama signed an $858-billion package to extend tax cuts for an additional two years and unemployment benefits that are set to expire. The package should help consumer spending and growth.
But what I’m concerned with is the debt and growth situation in Europe.
Moody’s Investors Service cut its rating on Allied Irish Banks, Bank of Ireland, EBS Building Society, Irish Life & Permanent and Irish Nationwide Building Society.
So, while I feel markets will continue to edge higher into 2011, I also still believe in risk management.
I advise taking some profits prior to the year-end. In addition, take a look at some of your losers to see if you want to absorb some losses to be used against your gains.
With stock markets closed this Friday and with the Christmas break upon us, trading will slow down this week and in the week prior to New Year’s.
At the end of the day, we can all rejoice over what was a decent year for stocks. Enjoy the gains, and soon we will gear up for 2011.
Iconic Chart Shows Biggest Devaluation of Our Generation
Yesterday, China’s central bank said its foreign-exchange reserves have hit $3.0 trillion for the first time in its history. China is awash in dollars. The U.S. itself has too many dollars floating in its financial system. Is it any wonder the U.S. dollar is collapsing in value against a basket of currencies made up of other major currencies?
Taking Stock: A Lot of Good News Already Priced Into Stocks
Most capital markets are due for a correction and that makes it more difficult to be a new buyer of stocks, bonds or commodities right now. All you have to do in the equity market is pull up a one-year stock chart on the S&P 500 Index and you’ll see the tremendous capital gain. The market has already priced in strong first-quarter earnings and, if companies don’t announce strong second-quarter visibility, share prices will retreat. So, what's next for investors?
A Safer Way to Invest in China: The Large-cap Chinese ETF
Playing the Chinese capital markets involves excessive political and economic risk. While the risk is high in trading Chinese stocks, especially of the small-cap variety and for smaller trading accounts given the current selling of Chinese reverse merger stocks, there's another, lower risk way you could play China.
