Dec. 8th 2008

As we draw closer to the end of the year what does the market have in store for us this week?

With a sharp rally to close the week, can we continue the progress we made?  We were impressed with the markets ability to shrug off the worse than expected employment number, however without a continuation this week, Friday may have been nothing more than shorts covering their positions.

So what clues can we look for this week to help guide us…

1. A continuation of Friday’s rally

2. Positive spin from news broadcasters

3. Mutual funds investing large cash positions

December is typically one of the better months for the market, this year has the potential to be the same.  In my opinion this month actually has the potential to be an even greater month because of the large amounts of cash on the sideline (especially institutions).  Institutions typically don’t like to show large sums of cash in their portfolios at the end of quarterly periods because it becomes more difficult to justify fees if they are just waiting on the side.

So my theory deals with the swell of cash the market could see if we continue to have a few more positive days because people will be afraid they are  going to miss the “move.”  The market has already shown it wants to move higher by shrugging off less than stellar news twice this month, time will tell if that can continue.  One event that could change the tone of the market this week is the release of the November retail sales report.  While most imagine this number to be fairly poor, it will be another number the market will have to deal with before it can move higher.DC

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