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Did you expect anything different?

|Includes: DIA, PowerShares QQQ Trust ETF (QQQ), SPY

The rally from the March 2009 lows was one of the largest rallies we have ever witnessed in stock market history. While the ninth year of a decade is usually a bullish trading year there a very few people who expected an advance over fifty percent off the lows. Many traders and investors including myself would have expected at least one 10 percent correction during that rally; as we all know that did happen. The closest that we did come to a ten percent correction in the major indexes was in June through early July 2009, when the market pulled back nearly eight percent. That was really the extent of it for the year of 2009 as far as pullbacks and corrections are concerned.

Why is 2010 a completely different picture for the stock market? When the SPDR TRUST (NYSE:SPY), Power Shares QQQ(Nasdaq:QQQQ), and Diamonds trust Series 1 ETF (NYSE:DIA) found a low in March 2009 the public was in despair. People believed that the next great depression was underway. Massive liquidity was put into the market by every central bank in the world. Cash literally poured into every toxic asset that was ever designed. Since that time the markets have responded by moving over 50 percent off their lows. Now what? Are we back to normal yet?

Today the markets want to know what is next from Mr. Bernanke and company (other central banks). Like the Janet Jackson song says, “what have you done for me lately”? What is next for an encore? The general problems such as the severe housing crisis still remains, the high unemployment picture has not changed, banks have cut credit lines are still not lending or making significant loans, and spending by the consumer continues to remain near extremely low levels. While the Federal government can create tax breaks and incentive programs for hurting citizens and residents to make them feel like they are getting something, however, can that really fix the problem?

Where are we now? Currently we are in the middle of a correction. If you have ever gone to a party, you know the party must come to end eventually. Well, the market is telling you that the 2009 party is over for now. Yes, someone will have another party along the way. New spending programs will come up to give the markets a lift. However, someone has to pay for these parties and with the current problems the cash is limited. Therefore, while there will be rallies along the way don't expect 2010 to be anything like 2009.

Nicholas Santiago
Chief Market Strategist
InTheMoneyStocks.com