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.
By Ed Mitchell www.freefinancialconsultation.com 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 heading. 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 question. 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 invested. 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 www.freefinancialconsultation.com
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