The New Year jubilance has come to abrupt sobriety the past few days. As of yesterday, markets are officially negative again year to date in 2009. How will the month finish out? This is a question we will not be able to answer... for another 18 days.

The past few trading days have served to work off some over-bought levels that had spiked on the major indices. This could be constructive. We are watching key trend supports for an indication of whether this action will serve to fill in the technical base for a more sustained rally, or fall apart again for another downside test. The big spook over the next few weeks will be disappointing corporate earnings reports for Q4 2008. Yes you would think this bad news has been priced in, but it is more the forecasts companies make going forward that will rule the day.

Conventional thinking to date has called for a bad first half 2009 with a recovery starting for the world economy after that. If that scenario were to hold, then stocks could well begin to rally into the next cyclical bull from here. This thesis will falter if too many companies admit they cannot see hope for a 2H recovery as of yet...   more »