Historically, January is the best performing month for the stock market.  When the S&P is up for the month, history tells us there is a 90% probability, it will be up for the year.  When it is up the first five days of the year, that is also a favorite bullish indicator.  Yesterday, the Dow was up almost 180 points.  So, we’re off to a good start . . . or not.

Trading volume was light yesterday, mostly the inflow of new IRA funds.  Still, the economic data was also good, with manufacturing up for 26 straight months.  More importantly, there was no bad news out of Europe.

At this hour, futures suggest a slightly negative opening.  I expect this week to trend listlessly upwards, marking time until the next meeting of Merkel and Sarkozy on Monday.  But, when the warm after-glow of the holidays collides with the continued intransigence of Merkel and the ECB, I expect the downtrend to start next week.