The year is quickly coming to a close and, while it has been a choppy year, we’re starting to gain some momentum as September is on track to be the best month of September in the market since 1939.

 There remain a lot of headwinds in this economy and most investors are having a hard time seeing the light at the end of the tunnel.  That said, what is driving this recent market upswing?

 Corporate earnings remain strong.  Many groups, like banking, are still driving earnings by expense reduction.  But, sectors like technology are experiencing strong top-line growth.  In any case, corporate America and banks have enormous amounts of cash on their balance sheets.

 The internals of the market are very strong.  In fact, one of our best “under the radar” indicators, the advance/decline line, hit a new 52-week high recently.  This component has historically been a good indicator of future market direction.

 The upcoming November elections appear to be a factor in monies currently flowing into the market.  Regardless of one’s political persuasion, the markets do perceive some degree of economic stability as it looks post election.

 The recent and potentially hugely significant sovereign debt problems have been at least tamped down.  The international monetary fund (IMF) basically threw a trillion dollars at the problem.  There is growing evidence that perhaps this problem was somewhat overblown to begin with. 

 This market has continued to act much like the one we saw in 2004.  During that year, the markets moved sideways for nine months before spurting higher in the fourth quarter and delivering an 8% gain to investors.  We believe this may well be the case in 2010 and, as such, we will continue to bias on the bullish side for the foreseeable future.