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The first and second quarter of 2010 could be seen as having generated a mixed response, however, if we put it in perspective with last year's performance, I think 2010 could have performed much worse.
We are now below the S&P500 value on January 4th, but not too far below. The market started well, but now we see a clear tendency to move sideways.
If we now take into account the fact that begin of this year we still had loads of good news and a bucket of hope in the economic recovery, I expect that the second half of the year will be a much worse performance.
Consumers are not buying much, the US unemployment figures stagnate, companies had some good results so far but much of it should be accounted for as being inventory purchases. Since consumption is not increasing, we will quickly fall back to a cruise speed mode of productions, as we have seen with Intel decreasing drastically its sales forecast.
Finally, traders will slowly start to prepare for next year. They will bet and make money on small trends, up or down, but this year should finish down to be able to have some bull run early next year. This is not a conspiracy theory, it is just based on the 'wisdom of the crowds' looking at booking a nice profit this year by shorting and preparing a good year 2011 :-)
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