Are the bulls coming ?

Sunday evening seems like a good time to visualize possibilities for 2009. While I prefer to follow market momentum (it is up, as of now), here is what investment wizards are writing:

The Santa Clause rally has come with gains in the last five days of December and the first two days of January. (the second trading day in January will be Jan 5 for European and US markets, so we have to wait for confimation on Monday). Quote: The absence of a rally – and one now seems highly unlikely – has often been the harbinger of a sizeable correction or a bear market in the coming year. Hence the saying: “If Santa Claus should fail to call; bears may come to Broad & Wall.” UnQuote

But risks remain plentiful and Bill King (The King Report) reminds us that “just as night follows day, international conflicts follow economic crises”.

Here is Richard Russel, Dow Theory saying : “It occurs to me that this is a good time to remember my old friend Marty Zweig’s classic warnings: ‘Don’t fight the tape, don’t fight the Fed’. Well, if you are bearish on 2009, you are indeed fighting the Fed and probably the tape”.

David Fuller (Fullermoney) added: “The crucial missing ingredient for stock markets to date has been confidence. Nevertheless that could change in January, given the high levels of cash held by most institutional investors….”

According to Jeffrey Hirsch (Stock Trader’s Almanac). “S&P gains during January’s first five trading days preceded full-year gains 86% of the time.” He also draws attention to the so-called “January Barometer” which states “as the S&P 500 Index goes in January, so goes the year”.

Nouriel Roubine is pessimistic:
“The United States will certainly experience its worst recession in decades, a deep and protracted contraction lasting about 24 months through the end of 2009. Moreover, the entire global economy will contract. There will be recession in the Eurozone, the UK, Continental Europe, Canada, Japan, and the other advanced economies. There is also a risk of a hard landing for emerging-market economies, as trade, financial and currency links transmit real and financial shocks to them,” …

Marc Faber says the global economy is going into severe recession and emerging markets will be hit the hardest.
So what’s going to happen ? The best minds do not know what will hapopen in 2009. Remember, they could not imagine what happened in 2008. So, why not let the market tell us where it wants to go, and, when .
For January, here is a scenario suggested by Bill King: “..,. A year end rally appears. This usually extends into the first day or two of the New Year. But then January turns ugly on anticipated horrid earnings reports that will appear during the second and third weeks of the month. Finally there is a performance gaming rally over the last few days of January.”