2011- Year of the Tail Chase

January 2, 2012

Weekly Market Outlook

By Keith Schneider

2011- Year of the Tail ChaseThe key US stock Indexes, after a year of extreme volatility basically ended unchanged depending on which index you want to compare your performance to. It certainly was the strangest, bumpiest ride to nowhere that I can remember.  Masochists should benchmark against the best performing US Stock Index, with the Dow Jones up around 5%. For those who prefer to look at the world thru rose colored glasses compare your performance against the Russell 2000 which was down about 5%. Those more in emotional balance might use the SPY which was basically flat for the year. If you want to have a party with your ego, compare yourself against Hedge Fund Titan John Paulson that lost over 50% in his flagship fund.

A nasty year end sell off in precious metals and a move down in the VIX (market Sentiment) bear further notice. Even as Iran has tried to escalate tensions to scare the West in order to pursue nuclear capabilities, Gold has dropped, indicating its use as a fear indicator has subsided for now. A move down in the VIX from recent highs of over 45% to now under 25% (US Equity Market Sentiment) bears further notice, as the fear factor in the US equity markets has certainly calmed.

Meanwhile the chart below pretty much tells us the picture... Follow the wedge

SPY Chart

If you missed "Phases and Forecasts" our 90 minute webinar covering key indexes, sectors, and individual stock ideas for 2012 tap here as it contains lots of timely ideas for the start of the New Year.

Happy New Year!!

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