1/26/04
Hi,

The Dow closed over 10,600. The NASDAQ has not yet closed over 2,200. The strength of this up thrust defies any logic. Now all the reported information (except jobs) appears to be strong. Earnings by and large are great. There appears to be an eerie simiarity between now and January 2000. All of the contrary indicators, VIX, Schottastics, etc. all indicate a major over-bought situation, yet the market continues to rise.

I doubt the Dow will close the year below 9,000, though we could trade below 9,000 during the year. It is in fact an election year, with the incumbent desiring re-election. 2005 is the year to watch. The Dow and NASDAQ should be down in 2005, the 30 year and 10 year Treasury yields should rise precipitously in 2005.

Gold has been correcting back towards $400 per ounce from over $425 - the bottom should be about $380 or higher - For re-entry points, I would wait longer. I don't believe the Gold stocks have bottomed yet.

The economy should continue strong thru the end of the 2nd or into the third and fourth quarters. By the fourth quarter the economy should start to slow down.

Again, next year (2005) there will not be the major stimulus to drive the economy, thus, in 2005, the economy should start to decline noticeably.

-- As always: For all of you who are passing Arnold's Ramblings on to friends, family members, enemies - whoever, now you can provide them a fresh copy, direct from the source! Ask them to go to http://www.arnoldsramblings.com/NavLinks/Subscribe.html.

Copyright 2004 Arnold's Ramblings Inc., All Rights Reserved.


- posted by Arnold @ Monday, January 26, 2004