Monday, January 01, 2007

Weekly Look Ahead

This week is an odd one. Most markets in the US are closed tuesday (see below), making this the longest market break since the September 11th attacks of 2001.

Typically after a long break the market will swoon a bit as people unload positions they have had to sit on for a while. This time the long market break is combined with a recent end-of year runup and thin trading the previous week. A neutral market would decline under these conditions on Wednesday, if the market manages gains we have a suprising bit of strength.

This week should provide a good sentiment barometer, and much of that will come about on Wednesday at 2pm EST, the time the Federal Reserve will release the minutes of their last meeting.

A quiet market (if it happens) still does not mean little action. Huge economic tides are moving beneath the surface. I think that soon I will be making my first calls ever on bonds - the investment category everbody forgets about while the market is going up, then wishes they had bought before the fall. This is a big shift from early last year when I actually took a financial position against bonds. Stay tuned for a detailed discussion.

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