The Leong Side of the Market
In 2010, small-caps were the runaway winners, with the Russell 2000 closing up 25.28%. Technology also provided some decent gains, with the NASDAQ up 16.88%. Lagging were the blue-chip DOW and S&P 500 companies, which ended up 11.02% and 12.74%, respectively. U.S. stocks outperformed the Chinese Shanghai Composite Index (SCI), which closed down 14.31% following stellar gains in 2009.
Merry times are here. We’re happy. You’re happy. Wall Street is happy.
With the gains on Tuesday, the Santa Claus Rally appears to be in place, as long as we see gains in the last five trading days of the year, followed by the first two sessions in January. Historical records indicate that stocks have increased an average of 1.6% since 1969, according to the Stock Trader’s Almanac.
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.
Traders appear to have brushed aside the mounting debt and deficit issues in Europe; but, be warned, these are not going away anytime soon. At least, that’s my opinion.
China is continuing to expand at rates well beyond the world’s other industrialized powers.
The Organization for Economic Cooperation and Development (OECD) predicts that China will grow its economy by 9.7% in 2011 and 2012, which, while lower than the previous rates, is still well above the global average of 4.2% and 4.6% in 2011 and 2012, respectively. In the third quarter, China’s GDP increased 9.6%.
Markets are continuing to edge higher after breaking above the previous chart tops, which is technically bullish. The DOW is 0.67% below its chart top, but I suspect this will be broken.
The break above the previous chart high may be sustainable, but failure to hold could leave stocks vulnerable to downside weakness.
Gold has edged higher in each of the past nine years, and it is set to close off its decade-long bull market. Buying has been driven by a combination of speculative trading in physical gold, gold ETFs, and buying as a safe-haven investment.
Chinese stocks are again the focus of increased attention and speculative trading. In China, the benchmark Shanghai Composite Index (SCI) was rallying and was down less than four percent this year, which is impressive given that the index had been down over 28% earlier in the year. Unfortunately, fortunes have turned, as there has been selling in Chinese stocks. The SCI is currently down 14.25% on the year.But. Read More