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While investors generally tend to be more optimistic at the start of a New Year, consumers don’t seem to share the same enthusiasm.  An ABC index of consumer confidence declined the most last week since February 4, 2008.  The confidence index fell to -47 in the week ending Jan. 10, down 6 points from a week earlier.  According to the ABC index, consumers don’t feel much better than they did one year ago when the index stood at -49.  

This week’s PERSONAL FINANCES measure dropped to -8 from +2 last week; the average over the past year is -9. 

Despite the market being up 67.9% from the March 9th low and all the billions the government has spent to support the economy, the measure of the consumer’s view of the STATE OF THE ECONOMY has gone from -88 a year ago to -82 last week; the average over the past year is -84.

That being said, the sharp rally in early 2010 is helping the bullish sentiment to improve.  According to Investors Intelligence the number of BULLS reached its highest level since Dec-07; the BEARS are at the lowest reading since Apr-87.

The Hedgeye Risk Management models have the S&P 500 in a Bullish Formation.  A Bullish Formation is when the immediate term TRADE (3 weeks or less) underpins the intermediate term TREND (3 months or more) and the long term TAIL (3 years or less).
Howard Penney

Managing Director