By Clyde Noel

Stock Report

Psychology runs the market this time of year so look for stocks to inch upward into next year. Expect some profit-taking disappointments, but the trend is upward.

What is working in the market’s favor seems to be that investors aren’t worried about Afghanistan anymore. Investors are confident we are on our road to recovery. Consensus is, we have seen things about as bad as it can get. If they find Osama bin Laden dead, the market will rise 300 points. If they capture him alive, the market will be up a mere 100 points.

Last week’s short trading days resulted in few investors buying because of the holiday, but the market still finished higher.

For the week, the Dow climbed 92.72 points to 9,959, or .9 percent. The Nasdaq composite index rose to 1,903, up .2 percent. The Nasdaq has been the best performer among the major indices since Sept. 21, with a 34 percent gain. However, it is still down 22.96 percent this year.

The Town Crier index was flat, down slightly by .05 percent. Several companies were downgraded recently and their stocks fell. LSI was off 11.55 percent, Nvidia, was down 4.77 percent and Sun Microsystems was off 4.33 percent.

The value sector sparked by basic industry stocks has been doing well. Value stocks are safe havens for investors looking for defensive positions with little risk.

History shows that value stocks do well during the early stages of economic growth, but the growth sector takes over in the latter stages of a bull market.

A recession is loosely defined as at least two straight quarters of falling GDP (gross domestic product). Economists expect the economic contraction to last at least until the end of the year.

This is the time of year parents and grandparents think about financial gifts for children. Often, the goal is to start building a college fund, and grandparents sometimes want to make sizable gifts to minimize taxes on their estates.

You can open a bank account on the child’s behalf, or give U.S. savings bonds or shares of stock in a familiar company.

Earlier this month, when Disney hit a low of $18.50, I bought each of my three grandchildren 100 shares of Walt Disney Co. The oldest child recognizes the value of the certificate and the younger ones can look at the Disney characters for enjoyment. Buying stock for the grandchildren is a wonderful thing to do to help the economy.

Things can’t get worse with free financing on big ticket items and low interest rates for equity financing of homes. It’s time to bottom fish on the market because they’re plenty of good names to pick up. He may be scrawny, but there’s a bull market in our near future.

Noel, a seasoned investor, covers the stock market for the Town Crier.