You may recall that I wrote about the Presidential Cycle in my essay of 12/30/05. It says, basically, that stock market performance is usually mediocre during the first two years of a President's term, but is quite good in the last two years of the term. We are now in the second year of President Bush's second term. Therefore, this indicator is saying that 2006 is likely to be only a so - so year for the stock market. This indicator was on the mark last year.

I wrote about the so-called "January Barometer" last year in my essay dated 01/21/05. This indicator, created by Mr. Yale Hirsch of Stock Market Almanac fame, says that the market's performance for the year will emulate January's performance. The Price of the VectorVest Composite fell $0.65 a share last January, so the market should have also gone down. The DJIA did, in fact, close down slightly last year, but the S&P 500 and NASDAQ composite were up slightly. The Price of the V V C was up 4.0%. I'd have to say that this indicator was also on the mark last year.

So both the Presidential cycle and the January Barometer worked last year. How are they doing so far this year? As of last night, the Price of the V V C was up 4.7%. Unless the market tanks over the next two days, the January Barometer is signaling an up market for 2006. The Presidential Cycle implies that 2006 won't be so hot, so it's not looking too good right now. But hold on a minute.

If one were to use 1998 and 2002 as examples, they would see that the market started off reasonably well in both of those years, then began to crumble in May and June. In both cases, the market bottomed in October and rallied strongly into the following year. If this market does the same thing, the early months will look pretty good, the summer months will be painful and the latter months will be those of recovery. In the end, the January Barometer will have done its thing early in the year and the Presidential Cycle should rule in the latter months.

If the Presidential Cycle works as it has in the past, the big rally which is expected to start late this year will last clear through January of 2008. So that's the story on Two Good Indicators.

THANK YOU VERY MUCH.
A new man, Dr. Ben Bernanke, will be taking over as Chairman of The Federal Reserve Board next Tuesday, January 31st. Many analysts are concerned about how well Dr. Bernanke will fill the very large shoes of current Chairman, Dr. Alan Greenspan. This was also the case 18 years ago when Dr. Greenspan took over from Mr. Paul Volcker.

The story of this transition was told in an excellent article, "Skepticism Greeted Greenspan, too," in yesterday's edition of USA Today. Mr. Volcker was a giant of a man, both physically and intellectually. He took office in 1979 when inflation was looking to go out of control. To make a long story short, Mr. Volcker took care of that.

What about Dr. Greenspan? How well did he do? There's a crowd in New York that doesn't think he did very well at all and criticize him at every turn. That's easy to do because anyone could allege that things would have gone much better had Dr. Greenspan done this or that. There is no way to know what might have happened had the geniuses had their way, so let's look at some facts:

Yes, there were three recessions and some economic slow-downs during his tenure. There were several financial crises, three bear markets and several market melt-downs, too. But through it all, Dr. Greenspan made the moves to right the problems and this country prevailed and prospered. Gross Domestic Product, for example, grew from $4.8 trillion in 1987 to $12.6 trillion in 2005 for a gain of 163%. Population rose 21.8%, from 243 million to 296 million, over this same period. So per capita spending is now greater than ever before. For investors, the S&P 500 went from 300 in August 1987 to 1,284 today, a gain of 328%. For that, I say nice job Dr. G., and Thank You Very Much.