Forecast 2004: Neither Bull nor Bear, probably a Moose:
The narrow-range action the markets have given us in the latter half of this year is an indication of the type of action we should expect in the new year to come. Throughout the latter-half of the 90's and up until the summer of 2003, the market has provided some of the most awesome volatility ever seen combined with incredible volume, and the most ideal conditions for traders to thrive, both in a raging Bull and raging Bear market environment. In my opinion, the market has now entered a period of reflection that is likely to last at least another year, perhaps more. Unlike the extremely tight ranges in the latter half of this year, 2004 is likely to yield a tradable environment, but one that oscillates on the border between the Bull and Bear Markets, trading inside a 20-25% range (approx. 32-37% in the Naz), much narrower than in prior years. At this time, I still feel that the Nasdaq has permanently bottomed in 2002, the same as I did earlier this year, although I cannot say the same for the S&P and DOW.
Just as I had expected for 2003, I see 2004 as a "transition" year, as the market continues to digest the rise and fall of the Nasdaq and the accompanying financial/emotional highs and lows this imposed upon the investing public. I want to look back upon 2003 as a year that brought the toughest trading environment I ever seen, as there were countless "5-point S&P range" days that were quite excruciating to live through as a short-term trader. At this point, while '04 is likely to be neither Bull nor Bear, I do look forward to an exciting tradable market!
This will be the last Weekly Review of the Year. I wish you all a joyous holiday season, and will see you back here in '04.
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