Weekly Market Commentary:

U.S. stock markets closed lower on the last day of 2006 but finished the week slightly higher. The Dow Jones Industrials (12,463.15 +119.93) and the Russell 2000 (787.66 +6.84) each picked up a shade under one percent while the S+P 500 (1418.30 +7.54) and the Nasdaq Composite (2415.29 +14.11.) each added just under a half of one percent on the week.

On the year, the Russell 2000 (+16.9%) came back to the pack but still edged the Dow Industrials (+16.2%) while the S+P 500 (+13.6%) and the Nasdaq Composite (+9.5) brought up the rear. While we don't typically include the NYSE Composite in our weekly commentary, it should be noted that the biggest of the big actually bested the bunch by advancing 17.9% in 2006.

That the seemingly strong new housing sales numbers failed to inspire equity markets higher last week raises a bit of a "yellow flag" for bulls. The housing market appears to be in more trouble than most people on Wall Street seem to want to contemplate. Combine that with a stock market that failed to break out when it could have, and the second half rally we just enjoyed starts looking a little vulnerable in early 2007. With that said there remains hope that all is not lost. Corporate profits appear to be solid; otherwise we doubt the pros at Goldman Sachs would have been handed out the countless millions they received in year end bonuses.

Trading in stocks resumes Wednesday. Market making news will include Ford Motor Company's report of what is likely to be a drop in December sales with analysts expecting Toyota to move into the number 2 spot in U.S. sales. December Fed meeting minutes are released along with ISM manufacturing numbers expected to remain under the magic number of 50. Thursday, jobless claims are reported and should show an increase, the 110th Congress convenes in Washington with Democrats in control by a very slim margin, and factory orders are expected to show a 1.7% rise in November after October's 4.7% decline.

Friday brings the December employment report which will be widely watched in an effort to determine if the economy is as strong as it appears despite what still feels like a housing slump. Numbers are expected to be steady from the last report, and show a modest increase in hourly earnings. Fed Chairman Ben Bernanke addresses economists in Chicago and should provide great fodder for next weekend's financial media outlets.

The first five trading days of January tend to be a harbinger of things to come as far as U.S. equity markets are concerned. Due to the passing of President Gerald Ford, equity markets are closed Tuesday, however the bond market will close at 2 pm in shortened trading.

With that said, we'd like to extend our best wishes to you for a healthy, happy, and prosperous New Year!

And thanks for staying tuned!