The Week Ahead: Where Will Stocks Finish The Year?

Many who are not invested in stocks have been fighting the urge to buy stocks as the market moves higher and higher. The evidence continues to suggest that the public is still not very invested in the stock market. As rates continue to edge higher, many are now also facing losses in their bond portfolios and their year-end statements may provide a shock.

All of the major averages, except the Nasdaq 100, made their highs at the end of November before correcting last week. This was consistent with the deterioration in the technical studies that was especially evident after last Monday’s close. It will take more than Friday’s sharp rally on the jobs report to reverse the signs of deterioration.

Things are much different than a year ago, as in December of 2012, the NYSE Advance/Decline line was leading prices higher, so I felt fairly confident just before Christmas that 2013 would Be Another Double-Digit Year. With the Spyder Trust (SPY) currently up 27.50%, the question now becomes will stocks hold these gains until the end of the year or will they close even higher?

Let’s look at the evidence. First of all, December is a good month for stocks with an average return since 1950 of 1.6%. This would give an end-of-the-year target of $183.89 (see chart) for the SPY.

http://www.forbes.com/sites/tomaspray/2013/12/06/the-week-ahead-where-will-stocks-finish-the-year/