So Goes January?

There are a number of "theories" that say things like:

• If the stock market is up during the first five days of the year, it should be a good year for the stock market.
• Others look at the entire month of January as an indicator for the year.

Indeed, some people have studied this -- and the numbers DO show that this is true around 85% of the time. As you might imagine, we don't give these "systems" very much credence -- but we DO believe that the market currently has a healthy balance between both bulls and bears. In fact, with the market rallying early in 2010, we're surprised that we haven't seen more press, analysts, or blogs screaming about this "indicator."

We think the reason that more people aren't screaming about this indicator -- is because inside, they are bearish. The stock market scared a lot of people -- and that fear still exists. The stock market continues to climb the "Wall of Worry" that we talk about regularly. The existence of fear -- and bears -- gives the "contrarian" inside of us reason to believe that this market has more room to rise.

Our long-term stock market indicators remain bullish. Our overbought/oversold indicators are currently mildly bearish -- so we have a neutral to slightly long outlook on stocks.