2009 was a year of feast and famine. It was quite trendy, not the type of market I like. Not a very good year for me. 2010 should be a less trendy market. Here are some guesses for 2010.1. It will remain a bull market. After some turbulence in January, the bull will resume. 2010 will be a calmer bull market, with fewer sharp rallies. The most likely scenario is a slow grind higher with momentary sharp selloffs. Those sharp selloffs will be buying opportunities.
2. Volatility will be low. Volatility dies in a bull market.
3. Dollar weakens. Fed exit strategy will be slower and much more muted than expectations. The main beneficiary of dollar weakness will not be the euro. It will be the commodity currencies, AUD and CAD.
4. Commodities will outperform stocks. I expect crude oil to lead commodities higher. We'll see $100 oil. As crude oil goes higher, there will be many skeptics complaining about lack of real demand and lots of spare capacity. Energy and grains will be strongest of the commodities. Precious metals will be the weakest.
5. The stock market/dollar inverse correlation will weaken. So will the stock market/crude oil positive correlation.
6. Asia will outperform US/Europe again. The Nikkei will outperform the S&P 500. China will get bubbly.
7. Mutual fund inflows into stocks will increase. The economy will improve spurring retail investment demand for stocks. This should steadily buoy the market higher. After the markets get too high, there will be a massacre in autumn.
8. There will be no year end rally, as the market sets up for another bear market starting in 2011.
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8 comments:
So you're expecting a selloff in January. What's your top and bottom range in SPX this month.
Tough to say. But a wild guess would be 1060 to 1140.
2009 was a good year for me since I'm typically long. I like your predictions for 2010.
Crude oil was the last bubble and is very expensive to store. Also a much larger market in dollars than PM's for example. Just curious as to how crude will be more respsonsive to dollar than other less liquid commodities.
2009 was not good for me either. I was short when I should have been long and vice versa. I don't day trade. Maybe I should start? I'm not sure what happens next year. If I had to guess I would agree with most of your opinions. One thing I can guarantee, comparing this recession with all of those in the past is..there will be a substantial move lower at some point. The question is when? My guess is late 2010 (earliest) or 2011. Good luck in 2010!
is it just me or did the bears get converted into bulls by a market that refuses to go down. i'm seeing increasing number of predictions for a weak market at the end of this year when just recently the calls for weakness were at the beginning. and if that's the case and the market was held up by converted new bulls that recently went from short to long, what happens when the old bulls decide to take things off the table. and aren't they the majority.
When you start seeing predictions that include no mention of future economic weakness, be it 1st half, 2nd half, 2011, then you know we're at a long term top. Until then, its still hazy to predict the long term.
Right now, people are short term bullish, long term bearish. All this tells me is that the market is vulnerable to a drop in the short term. In the long term, who knows? I'll figure that out as the fundamentals and psychology changes.
There is no need to predict what will happen in 6 months right now.
yeah it's futile to predict long term. how do we know the economy will double dip. all I know is that a small minority became recently bullish joining a majority that had been bullish for months. i think the majority is gonna start selling soon and good economic news isn't going to matter to them anymore as it had since the summer. maybe they will be scared they'll lose their profits if we do double dip by year end
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