The start of a year-end rally?

Market observations for the week of Nov. 29 to Dec. 3, 2010

Claymore Investments, Inc. 7 December, 2010 | 11:07PM

The major market indices finished the week moderately higher on further signs the economic recovery remains on the mend and fading concerns over a debt contagion in Europe. Seasonal influences were also likely at work as December historically has been the best overall month for market performance.

After correcting by just over 4% from the highs reached on Nov. 5, the rebound over the course of last week likely indicates that the correction has probably run its course. Last week's gains may also be partially explained by the growing expectations that the Bush tax cuts will likely be extended for all wage earners.

This could act as a catalyst for businesses to start dipping into their record cash hoards and resume hiring. As pointed out in these missives in the past, businesses have accumulated almost US$2 trillion in cash on their balance sheets and have been reluctant to spend and/or add to their payrolls until they get further clarity on the policy, regulatory and economic fronts.

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Claymore Investments, Inc.

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