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This past week kicked off what stands to be a very busy couple of months in terms of conferences, panels, "what do you think for 2010?" interview requests and maybe new exchange traded products.

What to make of a new year always makes for good discussion, but 2010 could make for an especially engaging debate. 2008 was horrible and 2009 in terms of the US equity market is pretty good so far. Before getting to any sort of analysis, a 21% year-to-date gain for the S&P 500 is a good result.

But, once we begin to peel away the layers, some will conclude that in fact things are really as good as a 21% lift would indicate and others will find reasons to doubt how "real" the move is.

It is my nature to be skeptical of big moves up in the market against this type of backdrop for the simple reason that "The Greatest Story Never Told" (does Kudlow still use that one?) does not hurt my clients or cause them to freak out. We are certainly going along for the ride but doing so cautiously. People tend to forget what it feels like when the market is puking down. I don't. It is those times, during a puke down, when the biggest mistakes get made, so trying avoid ever being the position to potentially panic takes on a lot of importance.

Doug Kass made an interesting point on Thursday:

The message of the markets over the past few weeks is that, with increased certainty, investors are growing more comfortable with the forecast of a smooth and self-sustaining economic recovery in 2010 and beyond. Many now have even adopted the view that the current cycle is the start of a normal multiyear recovery that could resemble the average 45-month expansionary phases that have typically followed a recession.

Not too long long ago this was the worst crisis in 80 years, maybe even worse than the Great Depression. Now sentiment seems to be headed in the direction Kass mentions. From where I sit, for the recovery to be close to normal in terms of magnitude and when it starts then the world's assessment of the crisis being so bad would have to be wrong--meaning it wasn't that bad. But how can that be given the higher number of failures than normal, the higher number of foreclosures than normal, the current state of unemployment and under-employment and the very extreme actions being taken by the Fed and Treasury?

If this was worse than normal then it would be reasonable to conclude the stock market has it wrong, that there will be more economic and fundamental shoes to drop and if that is true then the chance of another shake out or a few more years of trading range becomes very plausible.

That being said, I have been very consistent (and wrong so far) about one more decline that scares a lot of people but does not make a new low. I don't think we get anywhere close to 670 on the SPX but maybe it trades with an eight handle again.

The goal with this sort of assessment is not to be correct so much as it is to not get blown up or totally blindsided in case it does play out this way. After all, no one will panic if SPX closes out the year at 1200 but some folks might if it closes out at 850.

Source: The Big Picture: On Recession and Recovery