Analysts Predict A Volatile Market, Moderate Improvement For 2012

Buckle your seatbelts. That's the message analysts have for investors in 2012.

Although the S&P 500 is on pace to wrap up this year more or less flat, the stock market gyrated wildly over the last 12 months. The good news is that experts say we're likely to finish 2012 with stocks in positive territory. Getting there could be a bumpy ride.

"Flat years are very unusual and the history of the year after the flat years is actually very positive," said said Wayne Kaufman, chief market analyst for John Thomas Financial.

"I see the markets higher by about 10 percent in 2012," said Gary Harloff, owner of Harloff Capital Management.

Tim Speiss, chairman of the personal wealth advisor practice at EisnerAmper LLP, also predicted a positive 2012. "Let's say when we open for business on Tuesday, the Dow is at 12,200," he said. "I think you could see that climb up to something close to 13,000."

But this optimism for a modest increase is tempered by another shared sentiment: Getting there isn't necessarily going to be pretty.

In the near term, there's European sovereign debt to worry about, Speiss said. "The European Union financials are going to be the most troublesome areas for investors." Intervention by the European Central Bank is a good sign, he said, but they're playing catch-up trying to contain the mess. "They're in the midst right now of something they should have done a year ago," he said.

Speiss added that the market could turn negative at least temporarily if the Iranian regime follows through on its threat to disrupt oil shipments by closing the Strait of Hormuz. "[This] could be in the near term a significant issue" if investors lose confidence and if oil prices gyrate or spike higher, he said. "Most oil analysts are looking at oil prices around $105 to $110," Kaufman said. "If it goes much higher than that, it's not a great thing."

"I've been focusing on February of this coming year as being an important time," Kaufman said, because for the last three quarters, investors have snapped up stocks during earnings seasons. The next one happens in mid-January. But they tend to get buyer's remorse and dump the stocks shortly afterwards. Especially if companies lower their forecasts, Kaufman added, "Then you're going to see a pre-spring correction."

In the second half of the year, investors will have to steel themselves for what's virtually guaranteed to be an ugly battle for the White House and Congress. "I think that may take investors' eyes off of the stock market," Kaufman said.

"The administration will probably enjoy a decrease in unemployment rates, which from a political perspective could play to their advantage," Speiss said. He predicted the number of jobless Americans could drop from 8.6 percent as of November to as low as 8.3 percent by the summer — still high, but an improvement.

Gary Harloff also said improvements in employment should be evident in the third quarter as more companies become confident enough to start hiring. "It's starting, but it's not noticeable yet," he said.

If President Obama is voted out of office in November, though, Speiss said bank stocks could benefit. "If the Republicans are elected it could very well be that you'll see a more bank friendly environment," he said. If a new administration relaxes restrictions and capital requirements, "(t)hat could be very positive outcome for the financial services sector."

Kaufman said the election of a new president perceived to be more business-friendly than President Obama could boost investor optimism. If that happens, "I think you'll see an amazing fourth quarter rally," he said.

All of these factors will contribute the kind of volatility that marked this year's trading. One culprit is the proliferation of automated and high-frequency trading, Kaufman said. With machines rather than people responding to triggers in nanoseconds, even small movements can snowball rapidly.

Political and economic events also play a role, though, and 2012 will have more than its fair share. "I do think it's going to be a continuation of the type of volatility we've seen this year," Kaufman said. This year, there were 74 trading days during which 90 percent of stocks moved in the same direction, an all-time high. "It's like every few days we have one of these very lopsided days that used to be very rare occurrences," he said.

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  • by Barlow Location: Winterville on Jan 1, 2012 at 05:58 AM
    Yep, the banks and Wall Street love the Repugs. If the Republicans win the presidency, you'll see them finishing the rape of the middle class they started under George Bush. Go ahead and elect somebody who thinks "corporations are people" and wonder why you get treated like a second class citizen
    • reply
      by 40some on Jan 1, 2012 at 10:17 AM in reply to Barlow
      That mainly ocurred with this president's bloated TARP and bailout plans. The money didn't roll out to the banks with Bush like it did when Oblama signed the checks. Remember that term, "Shovel ready"?
      • reply
        by Barlow on Jan 1, 2012 at 02:16 PM in reply to 40some
        For the thousandth time, TARP is Bush's. Look it up. He let the Wall Street bankers still your 401ks and throw us into a recession and then paid them for doing it.
        • reply
          by 40some on Jan 1, 2012 at 08:05 PM in reply to Barlow
          Ok, taking your word for it. Maybe I should have said,"Obama Stimulus package". 1 or 2 Barlow? I don't think stimulus 2 ever made it, that was just a contemplation. What bill was it that was passed without even being read? Now was that health care or another stimulus?
  • by john Location: farmville on Dec 31, 2011 at 04:56 PM
    i am investing in town of farmville pitt and greene and what ever tim randall does
  • by Anonymous on Dec 31, 2011 at 03:26 PM
    Surely an Obama supporter would know how to spell Jethro.
  • by Anonymous on Dec 31, 2011 at 09:38 AM
    Volitility and chaos have been the hallmark of the Obama presidency.
    • reply
      by What is VOLITILITY??!! on Dec 31, 2011 at 02:28 PM in reply to
      Poor vocabulary/spelling marks yours!!! Hey Jefthro, try using a dictionary sometime!!!
      • reply
        by 40some on Dec 31, 2011 at 02:54 PM in reply to What is VOLITILITY??!!
        J E T H R O...It's jethro, not jefthro. Self-righteous indignation is a two way ....wait for it...skreet. Maybe you need to go back to skrool or stop pointing out the mistakes of others. Worry about your side of the it comes again... skreet.
      • reply
        by Obama Snake Oil co on Dec 31, 2011 at 02:54 PM in reply to What is VOLITILITY??!!
        Why are you so angry? Is it because Obama is so behind in approval you want to cry or did someone take you parking place in the trailer park?
        • reply
          by Anonymous on Dec 31, 2011 at 08:41 PM in reply to Obama Snake Oil co
          Get a job loser
      • reply
        by Anonymous on Dec 31, 2011 at 03:23 PM in reply to What is VOLITILITY??!!
        You meant Jethro, right, idiot.
      • reply
        by Anonymous on Dec 31, 2011 at 03:31 PM in reply to What is VOLITILITY??!!
        Hey....maybe you could get a job with WITN correcting grammar and spelling on this board! Are you really smart enough to fill that need?
  • by Obama Snake Oil Co Location: Washington on Dec 31, 2011 at 04:24 AM
    Thats simple, the spender in chief is getting ready to be ousted from his financial rewards programs for his supporters. The Rasmussen Reports daily Presidential Tracking Poll for Friday shows that 22% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-one percent (41%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -19
    • reply
      by Anonymous on Dec 31, 2011 at 05:33 AM in reply to Obama Snake Oil Co
      If pinnochiobama nuked a few states in this country he would still have the black vote.They don't care.
    • reply
      by Your party is the same on Dec 31, 2011 at 05:54 AM in reply to Obama Snake Oil Co
      It will not make any difference which one wins, because BOTH partys have sold us out. It's obvious what the ticket will be i.e. Romney/Christie, and they have not made ANY comments that would indicate they would change the spending habits of DC. The one that has will not get nominated i.e. Paul. Face it our foreign policy has us ALL OVER the world with bases EVERYWHERE, wars that do NOT involve our national security i.e. Korea, Vietnam, Iraq, etc. The wasteful spending is endless. When will you and your cohorts i.e. Lavon/Barlow, etc. open your eyes to the fact that y'alls politicians are for sale? Both partys do the bidding of special interests!! Are y'all stubborn or stupid? Niether of y'all will admit that career politicians of BOTH partys are the problem and that our current system is corrupt? Wake up folks, END THE STATUS QUO! Campaign finance reform NOW!!!! Let's take back our country and end the serfdom!! It's called a democracy!!!
      • reply
        by 40some on Dec 31, 2011 at 01:26 PM in reply to Your party is the same
        • reply
          by I wish!! on Dec 31, 2011 at 03:10 PM in reply to 40some
          I wish Paul would get in!! He's the only one that really addresses areas we need to cut back e.g. defense, entitlements, the Fed, etc. Niether party will reconize: 29 million unemployed, 3 trillion in infrastrucutre needs, high rate of unemployment of our youth, etc. Nothing has changed since the last financial crisis and we are still on the hook for the banks, etc. Shame BOTH partys are for sale, but most smucks continue to throw stones at each other and not admit that their party is corrupt too!!!
      • reply
        by Obama Snake Oil co on Dec 31, 2011 at 02:53 PM in reply to Your party is the same
        I strongly suggest you join the liberal hated TeaParty. What you just posted explains what they want, a stop to prgressive programs. This is whay the Lavons, Barlows and libterds hate them, they will not get their way.
        • reply
          by Anonymous on Dec 31, 2011 at 08:42 PM in reply to Obama Snake Oil co
          You sound like a Fascist.
      • reply
        by Barlow on Jan 1, 2012 at 08:04 AM in reply to Your party is the same
        You are correct. Both parties are for sale. Just one more than the other. You'll want to help with that. Sign the petition at
        • reply
          by Obama Snake Oil Co on Jan 1, 2012 at 03:05 PM in reply to Barlow
          Before you post as an idiot and relieve all doubt, try to google Obama supporters....then sign a petition to impeach guys just don't get your failure. You will soon and we will have to hear the "he cheated" and the anger you show when you use. You don't play well with others afterall....

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