32 Reasons Stocks Will Jump This Year

21. Copper will fall below $2 per pound as demand from emerging-market economies slows, investment-fund downside speculation rises, U.S. demand remains subdued as homebuilders work down inventories, and production rises.

22. Growth in China will slow more than estimated as government policies aimed at putting the brakes on investment finally take hold and many large construction projects are completed in preparation for the 2008 Olympics.

23. Emerging stock markets will underperform developed markets as the ending of the mania for commodities slows emerging-market economies. I am keeping a close eye on the Vietnam Stock Index (VNINDEX on Bloomberg), which recently has dwarfed the Nasdaq's meteoric rise in the late 1990s, rocketing 232.4% higher over the last 12 months. It's already 38.5% higher this year. The bursting of this bubble in Vietnam, which I suspect will begin very soon, may well signal the end of the mania for emerging-market stocks.

24. U.S. stocks will see increasing demand, specifically from the public and international investors, as the manias for commodities, emerging markets and low/negative correlation U.S. stock strategies reverse course.

25. Similar to No. 8, investors' irrational pessimism will lift. The 50-week moving average of the American Association of Individual Investors investor survey's level of bears, which is currently at very high levels seen only two other times since tracking began in the 1980s, will move back to levels normally associated with strong bull markets. After hitting new all-time records during the first half of the year, short interest on the NYSE and Nasdaq finally will show meaningful declines in the second half of the year, as some bears finally capitulate and investment funds that benefit from a declining or stagnant U.S. stock market begin to see meaningful redemptions. The percentage of U.S. mutual fund assets in domestic stocks is at the lowest since at least 1984, when record-keeping began. U.S. stock mutual funds, which have seen outflows for almost all of the last year, finally will see meaningful inflows.