So far the huge rally of 2009 has resembled that of 2003. Now the first month of January 2010 seems to continue to resemble that of January 2004.
Short term: Very oversold so a short term bounce is expected (and as I'm writing it is occurring.) But the stock market is still very risky to the downside for the short term. If the Nasdaq/SP500 can't rally back intraday above their last Friday highs (2262/1115) by the end of this week Jan. 29th then there's a possibility of the Nasdaq/SP500 will drop over +1% below last Friday's low (2200/1091) first before we get a more constructive short term rally back higher.
Medium term: The highs of early January has very likely marked a medium term TOP for the stock market. We are now in a medium term downtrend for the 1st half of 2010. The current correction thus far is about half way over. So the pain down is half way done. The stock market will get some short term moves up and down, but I expect it to be much lower several months from now.
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