Last Trading Day of the Year

The markets are down in early trading on this last day of the year. I am a bit surprised, as I thought that big funds would be net buyers as they anticipated new money coming in on Jan. 1. Let's see if some of this buying shows up later in the day.

Bond yields are lower again today, with the 10-year back down to 4.03%. The bond market is signaling its worry with the disinflationary effects of the credit crunch, even as the Fed heads ignore it and continue to talk about inflation. Silly.

Asian markets were mostly higher overnight, save for Pakistan which plunged following the Bhutto assasination. Oil is also lower again, falling back to $95. I think oil will hit $100 early next year, and that will mark the high for the year.

The ARMS Index is very high this morning (1.44), indicating heavy selling pressure. The Yen is also higher, which has been a great "tell" about how the markets fare in the short-term. The market has not been able to rally on days when the Yen is moving higher.

If the market closed here, the S&P 500 would finish +3.5% for the year.

I'll be back with some 2008 predictions later.