Indeed, for the last two years and three of the last four years, the market reached its high in May and then drifted down the rest of the year.  Just like the last two years and right on cue for this year, Europe is again raising worries.  Further evidence of a pending decline is said to be the current “choppiness” in the market.

But, I don’t think it will happen this year.  Yes, the market is very choppy now, but that is normal in a bull market, when we take “two-steps-forward-and-one-step back.”  In addition, the problem in Europe is different now.  A template has been created.  Austerity programs have started in several countries already.  The hook has been set.  Focus has now shifted from austerity to growth.  The ECB kicked the can down the road with its $1.3 trillion LTRO program, and it is now time to kick the can again.  The IMF is raising new funds easier than expected.  Of course, the pain will get worse for the people, and there will still be much screaming and shouting, but Germany is already committed, even if they don’t want to admit it.

That doesn’t mean Europe cannot hurt the world.  A major banking failure there could easily create a major derivative problem here.  It bears watching closely!

Of course, in 2012, you can closely watch the European credit crisis . . . even when you’re sitting on the shore.