By Ed Mitchell
January's stock market (whether it goes up or
down), is usually a forecast as to how the market
is going to go for the rest of the year.
The Dow closed on Monday up 130 points, at
11700. The rest of the week was less impressive
closing on Friday at 11619, not a good sign.
There is a lot of uneasiness in the market
place. Trillions of dollars are sitting on the
sidelines in cash & money market accounts
remaining risk free & liquid. Investors are still
uncertain as to where this economy is
Unemployment, reported at 9.4%, is more
realistically 16-18%, taking into account
those who have given up looking for work.
Gasoline is over $3 a gallon, and could well
reach $4 before the end of the year. The
drilling in the gulf is over, & our dependence
on foreign oil from countries that have no
love for the US, (read Venezuela, Iran, Mexico,
etc.) will be an ongoing problem.
So what are we to do? Continue to keep our
money in safe non-growing, risk averse
areas, or should we look to invest in
commodities & emerging markets like China,
India & Brazil?
Many Exchange Traded Funds (ETF's) have
shown amazing growth this past year.
Emerging markets have done well, S. Korea
(EWY), was up over 25%, Russia (TRF) was up
22%. Many Sector ETF's did well also, Large
Cap Tech (QQQQ), was up over 20%,
Transportation (IYT) up over 24%. Equities in
2010 did fairly well, but will this growth be
sustainable in 2011? That's the unanswered
Proponents of the Elliot Wave Theory, a form
of technical analysis put forth by Ralph N.
Elliot in the 1930's are not so optimistic.
Elliot proposed that market prices unfold in
specific patterns by identifying extremes in
investor psychology. Though an accountant
by training, he was an avid analyst of the
stock market as well.
A major market correction of over 50% is
projected by certain Wave Theorists in late
spring/early summer 2011. This would bring
the Dow down to the 6000 point range. A
devastating scenario for those currently
As the year unfolds, it is recommended you
meet with your Financial Advisor for an in
depth portfolio review and analysis. Getting
expert advise is critical for today’s climate.
Author: Ed Mitchell,
Registered Investment Advisor