What does 2006 hold for the Dow?

Some say that stock market activity in January is a good indicator of what will happen later in the year. So what should investors be watching out for?

It is very likely that 2006 will see an eventual end to the two-year trading range suffered by the Dow Jones Industrial Average. We hope that is so because its ending will be a reliable and important signal for future stock market action. As we have said repeatedly over recent months, should this two-year range end with a break to the upside above 11,000, we will increase our stock market exposure, particularly to Asian markets, such as India, China, and South Korea. We already enjoy significant exposure to the Japanese stock markets. Since the last issue we have added a further 5% holding of JPMF Japan fund to most portfolios.

We continue to view technology investments as a future opportunity if the Dow Jones gives the positive signal. Current holdings in UK bear funds would be put under pressure; these would probably be sold on the same positive signal.

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