Food For Thought...

Investors usually look at the first five trading days of January (of each new year) as an indicator of how that year is going to turn out to be. Judging from this year's flying start (the market being up well over 3% in the first week), we should expect a bull market year. A lesser well-known fact perhaps is something called the December low indicator -- which just states that if the market crosses the Dow December low (made on December 30th, 2005 @ 10,717.50), especially in the first trading month of the following year, there is bound to be trouble ahead. The Dow crossed and closed below that level last Friday, after the expiration-exacerbated selloff, and Monday's recovery wasn't anything to write home about either. So, two conflicting views are clashing right now and it's hardly surprising that vols have picked up recently. I expect the bulls to eventually win, but only as far as the first quarter is concerned (hence my March'06 level of 1,310 in the SPX still stands). I am not sure what happens beyond that. If someone does, I tip my hat off to them.