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Market SHAKE, Gold RATTLE, And Dollar ROLL For 2010

|Includes: AAPL, AMZN, Baidu, Inc. (BIDU), GOOG, GS, JPM

The SPX (NYSE:SPY) market is trading higher to start the first trading session of 2010. This all comes on the back of a weaker U.S. Dollar (NYSE:UUP). Many traders and investors have been discounting the weak dollar/stronger stock market relationship over the past three weeks as both have moved higher together. Today that old relationship is certainly alive and well as the dollar is getting crushed and the market is soaring. Obviously gold (NYSE:GLD), oil(NYSE:USO), and agriculture stocks such as Potash(NYSE:POT) are all higher today. In the past the market usually trades higher during the first few days of the new trading year. The key is to see what it does once the volume comes back into the markets. It is said that the market goes the same way as the month of January goes. Last January was negative month and the market staged a historic rally in 2009. Therefore, watch the leading stocks and indexes going forward and don't listen to any old market sayings.

When the dollar is weak it is important to look at how leading stocks trade that are not inflationary or commodity related. Apple Computer (Nasdaq:AAPL), Google (Nasdaq:GOOG), JP Morgan (NYSE:JPM), and Goldman Sachs (NYSE:GS), are all leading stock that are trading higher today that are not commodity related. On the flip side leading stocks such as BIDU Inc (NYSE:BIDU), and Amazon (Nasdaq:AMZN) are actually negative on the day showing weak relative strength intra day. This is reason for concern when some leaders are not participating in such a big rally.

What will 2010 bring for the markets? Many of the talking heads in the media are looking for another huge year. Personally, I would not go out and buy the new Ferrari just yet. Throughout history the nine year of a decade is usually a very bullish year. This is not the same case for a zero year of a decade. This year may bring people back to reality a little bit. The major indexes are up over fifty percent from the March 2009 low. Do they go back to new all time’s highs again this year?

The 10 and 30 year bond yields have been rising lately and this could put some more pressure on the already depressed housing market as mortgage rates will rise. The last time the 10 yr bond yield reached 4.00% the stock market actually had a four week pullback in June 2009. This was as close to a correction as the market has seen since the March lows. We are getting close to that level again so beware of 2010.

Nicholas Santiago,
Chief Market Strategist
InTheMoneyStocks.com