We are reaching a point in the market where the bulls are either going to commit or fold their positions.

The markets have reached a level where they probably won't be able to move higher without a surprise news event or some real conviction by the bulls. This week will probably see some window dressing by fund managers but the next week is going to be critical for market direction.

The next week will not be held back by tax considerations, year-end bonuses or end of year position statements. Money managers will be in a new year with another 12 months ahead of them and a blank slate for bonus calculations.

Historically the highs for January come in the first half of the month with the average high on Jan-12th. Nine of the last ten years saw highs early in January and decent sell offs as the month progressed with Q1 lows in February and March. This is a tough trend to buck with the S&P up +24% since July and +6% in December. The urge to take profits is going to be very strong.

Because of the potential for volatility in the days ahead I am not going to add any new plays today. I raised the stops on the positions we have and I will be content to watch any Santa rally (last five days of December, first two days of January) from the sidelines if we get stopped.

I hope everyone had a very merry Christmas and I am looking forward to a very prosperous new year!

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Jim Brown



Current Portfolio




Current Position Changes


None


New Recommendations


None


New Long Term Recommendations


None - Waiting for a "real" market dip


New Aggressive Recommendations


None