Friday, January 02, 2009

Well, of course the markets are up - It's a New Year!

The financial media are all buzzing excitedly over the sharp rise in the markets today. There are a couple of factors that continues to play a role:

1) No one is working this week on Wall Street. Light volume indicates that all of these moves have been driven by an absence of sellers.

2) The start of a new quarter does mean that some funds have to re-invest. Coupled with the limited sellers in the market this fueled much of today's rally.

But, however, it's happened, the markets are back at a 2 month high. Is this a sign of something good just around the bend? I'm not convinced. In fact, I think that just the opposite is true. I expect business to get demonstrably worse for most companies in the coming quarters.

A number of big hedge funds (that play both long and short) are starting to reload their shorts and I expect that sometime next week the buzz kill that we've come to know as "reality" will begin to sink in.

Happy New Year!

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