Recapping the First Half of the Year

Not everything has remained unchanged since the year started. Quite a few things are significantly higher or lower:

Fuel costs. Oil cost roughly $34 a barrel when the year started, and gasoline averaged about $1.75 a gallon. Those prices are now $37.50 per barrel and $1.95 per gallon. That's better than they were a few weeks ago, but still considerably higher than when the year started.

Interest rates. The 10-year Treasury began 2004 with a 4.25% yield. It is now 50 basis points higher at 4.75%.

Market internals. While the indices did a round trip, most of the internals -- especially the Nasdaq cumulative high-lows -- are still appreciably below the healthy levels they saw in late 2003.

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Sentiment. Most sentiment numbers are way off their extreme readings: Bull-bear sentiment and the put-call ratios are examples. The exception is the VIX, which at 14-15 is appreciably lower than the 17-18 levels we saw six months ago.

Will the second half of the year be a replay of the first, or a mirror image instead? Because of several factors -- the presidential election, the sellers' capitulation and the "first 5% selloff" rule -- I'm betting on the latter.

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Barry Ritholtz is chief market strategist for Maxim Group, where his research and market analysis are used by the firm's portfolio managers and clients in the U.S., Europe and Japan. He also publishes The Big Picture, his macro perspectives on the economy and geopolitics, entertainment and technology industries. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Ritholtz appreciates your feedback and invites you to send it to [e-mail].

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