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The “New Normal”, just like the late 1990’s “New Era”, will likely fade from popular jargon over time. Counter to “New Normal” reasoning, the Consumer Discretionary sector has demonstrated remarkable performance.

We consider it incredible that most of the leading economic indicators have staged such traditional V-shaped rebounds with virtually no boost from the housing sector.

A look at stock performance in various inflation environments would seem to predict below average performance in 2009, but threat of monetary debasement inflation in 2011 and beyond could set the stage for poor performance.

Our broad read of the stock market is still bullish, but we can’t help noticing that the concerted effort to supercharge the economy via liquidity may be losing some steam.

A look at earnings and revenue risk to see how the market reveals its preference.

Jim Floyd’s analysis of the interest costs facing the U.S. due to the soaring budget deficits.

While most are content to make annual predictions at this time, leave it to Doug Ramsey to bite off an even bigger piece…predicting the next DECADE.

While most are content to make annual predictions at this time, leave it to Doug Ramsey to bite off an even bigger piece…predicting the next DECADE.

Initial outlook for 2010 is to see the S&P 500 rise to 1300 or 1350 during the first half of the year but then give up those gains in the second half of the year. We are counting on the Major Trend Index to help navigate the choppy market.

The 2008 worst performers shot to the head of the class in 2009. History however shows it doesn’t usually pay to buy the prior year’s laggards in hopes of hitting it big the next year.

Based on loud bearish complaints about the “junk rally”—and our commentary on the Revenge-of-the-Nerds (anti-momentum) effect—it should come as no surprise that 2009 marked the most dramatic reversal of industry leadership we have seen in our twenty-plus years of tracking this work.

In 2009, Main Street investors continued to pull money out of U.S. focus equity mutual funds. There were  some equity funds that they did embrace…specifically Emerging Country funds.

A look at how the market reveals its preference for the top-line growth (revenue growth) vs. the bottom-line growth (EPS growth).

Review of quant strategies shows momentum out of favor in 2009, with value factors working best.

Over this entire period, the S&P has narrowly beaten the Russell 2000, but not by much.

The longer term data does suggest that at current interest rate levels, investors can expect sub-par returns over the next 1, 3, and five year timeframes— and we use the term “sub-par” quite literally.

In this month’s “Of Special Interest”, Eric and Doug put the current market in historical context. They use a variety of factors to assess the potential for further upside.

Climbing the bull market stairs. Our initial upside price target for the S&P 500 is 1300 to 1350. This is based on normalized P/E ratios moving to prior bull market average peak levels, as well as on past market peaks.

Market breadth has weakened considerably, which has historically been a big negative for stocks. However, the lead time between peaks in market breadth and eventual bull market peaks are long and variable.

Current market is closely aligned with the 1973-1974 post bear market recovery. Expect to see series of higher lows before market ultimately makes new high.