14 January 2011

WEEKLY SUMMARY

The market continues in an uptrend with the DOW up 112 points (.96%) while the S&P 500 rose 1.7% and the NASDAQ (tech stocks) was up nearly 2% this past week. This trend is very similar to the week before. The dollar is down and oil and the market are up. This is the relationship that I have observed to be normal over the past two decades. The Dow closed last Friday at 11,787.38. We haven’t seen this level since 23 June 2008. We should note there has been a relatively steady uptrend (bull market) since 2 March 2009, when the DOW closed at 6,626.94 and almost everyone thought the sky was falling. We have enjoyed a 20-month bull market, with indications that it may continue.

It has been a rough ride since the last market top on 1 October 2007 when the DOW closed at 14,066.01. We see from Figure 1 that the last bull market run was from 1 September 2002 until 1 October 2007 for 5 years and 1 month.

Figure 1: Dow Jones Index – 20 Year History

We also note that the second previous bull market was from January 1995 until December 2000, or approximately 5 years. Do you see a trend developing here? Could we be almost two years into a 5-year bull market? Who knows for sure? Also notice that for the last 20 years the bear markets are shorter in duration than the bull markets. Another way to say the same thing is that market corrections usually are more rapid than up-trends. My forecasts suggest the strong possibility that the bulls will continue to run during 2011 and 2012. That would be nice! The summary of major market metrics can be seen in Table 1.

Table 1: Summary of Major Market Metrics

	Last	Now		%
Index	7-Jan-11	14-Jan-11	Change	Change
DJIA	11,674.76	11,787.38	112.62	0.9646
S&P 500	1,271.50	1,293.24	21.74	1.7098
NASDAQ	2,703.17	2,755.30	52.13	1.9285
Wilshire 5000	13,428.94	13,672.74	243.80	1.8155
Russell 2000	787.83	807.57	19.74	2.5056
AMEX	2,150.58	2,185.52	34.94	1.6247
NYSE	7,980.32	8,174.12	193.80	2.4285
Vix	17.14	15.46	-1.68	-9.8016
Crude Oil	88.03	91.67	3.64	4.1350
US$/Euro	0.7748	0.7469	-0.0279	-3.6009
US$/Yen	83.1488	82.8672	-0.2816	-0.3387
Pound/Yen	129.2789	131.5061	2.2272	1.7228
$Index	81.17	79.05	-2.1200	-2.6118