It's a wrap. We had a nice little jig in the final minutes of trading, but 2010 is now in the books and, good or bad, we can forget about it and turn our attention to producing a very prosperous 2011.
The action this week was pretty typical of holiday trading: light volume, an upside bias and some excellent pockets of momentum. I found it a bit worrisome that many of the big-cap leaders acted poorly and that traders were so intent on trading some of the most speculative names, but it is tough to read a whole lot into the action during the last few days of the year. Taxes and portfolio rebalancing can have disproportionate impacts and, as we saw, aggressive trading creates some odd action under the surface.
The first few days of a new year are often positive as new money is contributed to retirement accounts and mutual funds -- but this isn't always the case. After an exceptionally strong finish in 2004, for example, the market went straight down after a positive open on the first day of trading in 2005. So, even though seasonality tends to favor the upside, don't be too overconfident about that new money driving us higher.
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