The market continued to move lower and finished the final session of the week and the month at its worst level in more than two months. For January as a whole, the Dow was off by 3.5 percent while the S&P 500 was lower by 3.7 percent. Historically the performance in January is a reliable indicator for the rest of the year – “As January goes, so goes the rest of the year”. And since 1950, the S&P 500’s full-year direction has matched its January performance more than 90 percent of the time according to the Stock Trader’s Almanac. But last year was quite an outlier as the worst –ever January didn’t prevent the market posting double-digit gains for the whole year.

Heading into the month, the market was in a high note with very high expectation. Investors thought that companies would in general post better-than-expected earnings results and the economy would do well in the fourth quarter. About half way through the earnings season, the proportion of companies that beat expectations is one of the highest in history. And this morning, the fourth quarter GDP showed the fastest economic growth pace in more than 6 years. But the market was still sold off for the month. Why?

For starters, the market was a little ahead of itself entering into the current earnings season. Since March lows, the market rose not only in each quarter but also in each month besides October for the rest of 2009. Many stocks have doubled or even tripled from their prices in March and are back to their pre-recession levels. So a correction of 5% or even 10% is quite reasonable. Next, the market faced some new uncertainties towards the late part of the month. Although the banking regulation proposed by President Obama is not new and is likely to have minimum impact to overall banking profits(for example, Goldman Sachs is likely to be the most impacted bank under the regulation but only 10% of its profit would be affected), investors always hate uncertainties. The uncertainties simply provided investors a good reason to book profits. So what’s next?

I think the market will resume its uptrend movements once the dusts settle down for the same reason as I made a strong call to buy equities at the end of March. Following the recent slump, the valuation is becoming attractive once again in some stocks and even for the market as a whole, less than 15 times PE based on 75 dollars S&P 500 companies’ earnings for 2010 is not that expensive considering the interest rates for both short-term bills and long-term bonds are currently below 4%. Also, we should remember that since the stock market came to existence, investors are always facing uncertainties no matter they like to admit it or not. The current uncertainties are nothing new and are less influential compared to many precedents.

All 10 major sectors finished the session lower led by energy and tech. The CRB commodity index dropped 0.7%. The US dollar was higher against most major currencies. Treasury yields declined. The three-month US LIBOR was unchanged at 25 bps. The VIX index rose less than 1 point. The market breath was negative on both NYSE and Nasdaq. The volume was a little heavier compared to the previous session.

The market tumbled today with all three major indexes finishing the session lower by 1%. Weakness in the tech sector was the main drag in today’s trading. Tech has been one of the strongest sectors since the March Rally started. Investors had hoped that corporations would increase their IT spending after cutting it in the previous two years. With high expectations, investors were disappointed by Qualcomm’s earnings release, which reduced its full-year sales forecast. Besides the tech concern, the market also reacted negatively to a report from S&P that said it didn’t consider Britain’s banking system among the “most stable and low-risk.” The report sent the US dollar higher and dragged down commodity prices.

In other today’s economic news, initial jobless claims fell 8K to 470K, worse than consensus. Durable orders, meanwhile, rose less than expected in December. But excluding transportation, it increased 0.9%, better than a 0.5% rise expected. Tomorrow’s fourth quarter GDP report will be quite interesting to watch.

All 10 major sectors finished the session lower led by materials and tech. The CRB commodity index dropped 0.4%. The US dollar was higher against most major currencies. Treasury yields rose. The three-month US LIBOR was unchanged at 25 bps. The VIX index rose less than 1 point. The market breath was negative on both NYSE and Nasdaq. The volume was a little heavier compared to the previous session.

The market ended the Fed decision day modestly higher. As expected, the post-meeting statement unveiled little surprise to market participants. The statement indicated that economic activity continues to strengthen and expected to keep interest rate low for “an extended period of time”. To the latter part, Kansas City Fed President Hoenig was the only member to vote against it. The market initially was moving down following the release of the statement at around 2:15pm as the dissenting vote was seen as a sign of potential shift in the Fed policy. But the financial sector took the leadership and sent the Dow higher by more than 100 points from its lows. It should be noted that commodity shares were under pressure throughout the session with the dollar moving higher.

In other today’s economic news, new home sales numbers came short of expectations. Annualized new home sales for December unexpectedly dropped 7.6% while consensus was calling for a 3.0% increase. The report echoed Monday’s weaker-than-expected existing home sales report.

Most major sectors finished the session higher led by financial and tech. The CRB commodity index dropped 1.9%. The US dollar was higher against most major currencies. Treasury yields rose. The three-month US LIBOR was unchanged at 25 bps. The VIX index dropped more than 1 point. The market breath was neutral on both NYSE and Nasdaq. The volume was a little heavier compared to the previous session.

The market finished the Tuesday slightly lower. Traders are hesitant to make heavy bets ahead of several key events, including the FOMC decision on Wednesday, President Obama’s state of the union address Wednesday night and fourth quarter GDP release on Thursday. The market currently expects little change in the FOMC post-meeting statement. But in reality, the Fed has quietly started to remove liquidity from the system. Besides stopping several emergency programs, the Fed has slowed its money supply. After peaking at around 10% of annual growth, M2 growth has dipped to around 3% in recent weeks.

In today’s economic news, the S&P/Case-Shiller Home Price Index for November came in at 146.3 compared to 146.6 in October. The reading was mostly in-line with expectations. Consumer Confidence Index climbed to 55.9 in January from 53.6 in December. The January reading was the highest in more than one year.

Most major sectors finished the session lower led by financial and telecom. The CRB commodity index dropped 1.0%. The US dollar was higher against most major currencies. Treasury yields were little changed. The three-month US LIBOR was unchanged at 25 bps. The VIX index dropped less than 1 point. The market breath was negative on both NYSE and Nasdaq. The volume was a little heavier compared to the previous session.

The market rose slightly in the first session of the new week following last week’s big sell-off. Investors were somewhat relieved by the White House assurance that Bernanke would be re-appointed. This week is going to be the busiest week for the earnings season and so far about 80% of the companies posted better-than-expected results. The ratio is one of the highest in history. However, since most good news has been priced in, the stock prices are usually facing selling pressure regardless its earnings results. Going forward, economic development will be a key to watch and fourth quarter GDP figure scheduled to be released later this week will be of importance. Separately, existing home sales for December fell a larger-than-expected 16.7% month-over-month to an annualized rate of 5.45 million units, indicating the housing sector is still vulnerable if it were not with the help from the government.

About half of the major sectors finished the session higher led by telecom and materials. The CRB commodity index rose 0.4%. The US dollar was lower against most major currencies. Treasury yields rose. The three-month US LIBOR was unchanged at 25 bps. The VIX index dropped almost 2 points. The market breath was positive on both NYSE and Nasdaq. The volume was lighter compared to the previous session.