Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20
Facebook (FB) AI Mega-trend Tech Stocks Investing 2020 - 10th Feb 20
The US Constitution IS the Crisis - 10th Feb 20
Stock Market Correction Continues - 10th Feb 20
Useful Tips for Becoming a Better Man - 10th Feb 20
Will CoronaVirus Pandemic Trigger a Stocks Bear Market 2020? Part1 - 9th Feb 20
Could Silver Break-out like it did in 2011? - 9th Feb 20
The End of the Global Economy - 9th Feb 20
Fed to Stimulate in Any Crisis; Don’t Let Short-Term Events Bother You - 9th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Stock Market Outlook 2011

Stock-Markets / Stock Markets 2011 Dec 30, 2010 - 09:36 PM GMT

By: Sy_Harding


But first, how did my forecast for 2010 work out?

A year ago there was considerable excitement about the recession having ended the previous June, and the stock market surging up in a dramatic new bull market off its March, 2009 bottom.

But I predicted that 2010 would see a return of problems; for the real estate sector once the tax rebates for buyers expired in the spring, that loan defaults and home foreclosures would continue to rise, that unemployment would continue to rise, that consumers would remain hunkered down. So economic growth would be anemic and the economy might even slip back into recession for a quarter or two.

Most of that came to pass, except that while economic growth slowed enough in the summer to panic the Fed into promising, and then providing, another round of quantitative easing, the economy did not quite dip back into recession, economic growth slowing only to 1.7% annualized in the second quarter at its worst.

On the stock market, I predicted it would run into a serious correction during the market’s typically unfavorable season beginning at the end of April, but that the most important feature of the year would be “an important bottom, which will be a time to buy stocks with both hands. But it will be tricky to identify the key turning points, not made easier by the fact that each of the last two years experienced serious downturns right out of the gate, beginning just a few days into January.”

That was just about how it went. The market experienced a mild correction of 7% that began in January and ran into early February. It then recovered to new highs by the end of April, at which time it topped out into a 16% correction to its July low. And as it turned out, that low was a time to buy stocks with both hands. Although the S&P 500 is up only 12% for the year, for anyone who stood aside to await the low, it has gained 24% since the July low, while the Nasdaq has gained 27%.

Unfortunately, the forecast was also correct that it would be tricky to identify the turning point. I got the April top right, with my Seasonal Timing Strategy triggering its exit signal on April 20, just a few trading days before the market’s April 27 peak. But I certainly missed the low in July being the important low for the year, having come to believe during the summer that the low would not take place until September or October.

So now on to 2011:

The economy should continue its slow growth in 2011, inspired by ongoing government stimulus and support, but held back by continuing high unemployment, and a housing industry still mired in a depression, which will keep consumer spending (65% of the economy) muted.

On the stock market, investor sentiment is now at extremes of bullishness and confidence regarding 2011, and for good reason.

Next year will be the third year of this Four-Year Presidential Cycle, and there has not been a negative 3rd year since 1940. Every administration does whatever it can in the third year of its term to make sure the economy, and therefore the stock market are positive and strong when re-election time rolls around.

And this time around the economy and market will be further supported by the Fed’s additional round of quantitative easing, which began in November and runs through June.

That’s the good news. Next year should be a positive year for the market.

The bad news is that I expect 2011 will be similar to 2010, with considerable volatility and some scary moments on the way to that positive finish.

The problems are liable to begin early in the year. The significant rally from the July low has the market overbought above key moving averages, and has investor sentiment pumped up to extreme levels of bullishness and confidence usually seen at rally tops.

That combination is liable to roll the market over into a correction of some degree beginning in January. By the way, that’s becoming a habit. While historically January tends to be one of the most positive months of the year, in each of the last three years the market has experienced corrections that began in January.

In all three of those years the correction that began in January bottomed in February or March, and the market then rallied at least into May. And that is my first prediction for 2011.

The market is then liable to run into trouble in its unfavorable season again. The list of potential catalysts for that trouble is fairly long, and includes the ongoing debt crisis sweeping through Europe, which will continue to periodically flare up, China’s increasingly serious efforts to slow its overheated economy and the effect that might have globally, the projected increase in the number of home foreclosures and bank closings even though the economy continues to slowly recover, and so on.

So my forecast is for a year quite similar to this year, with an early correction of some degree, temporary recovery, then a more significant correction, followed by a substantial rally off the low to produce a positive year.

Sy Harding is president of Asset Management Research Corp, publishers of the financial website, and the free daily market blog,

© 2010 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules