Mon 2?27/12 4:02 PM – US Stocks Recover From Early Selloff

US stocks were sharply lower at the start of trading, following the lead of Hong Kong and Europe. In fact, these early selloffs seem to be the orders of Europeans when their own markets sell off.

As with the other failed selloffs the market came back to finish about 1/4% higher, the only major world market to do so. While the gain is slight, that’s a strong market.

A study looking at other periods when the US stock market went nearly straight up the first two months of the year found that in every case it was higher still 3, 6 and 12 months later. This could be the lone exception but that is interesting.

Add to that this is a presidential election year, which usually bodes well, the still skeptical public with much of their cash on the sidelines and you have a case for a bullish 2012. The main dangers are slowing economic growth in Europe and China pulling the US economy down, an attack on Iran by Israel or escalated problems in Syria that might also threaten oil supplies. Oil at $105/barrel is already a problem that may get worse fairly quickly. I will be surprised if we don’t see $4 gas as the national average in the next month. It is currently at $3.70.

Bonds were up today, oil and natural gas had profit-taking, as did gold.