Stocks and metal markets have continued higher that past two days on light volume as traders take advantage of holiday market conditions. Our best guess is that volume in most markets is a third to half of what it is on a typical trading day, but that hasn’t stopped metals from moving higher this week – with Palladium +4.6%, Silver +4.4%, and Gold up 2.3%.

For multi-market trend following programs still holding long, these end of year gains are like finding an unwrapped present under the tree the day after Christmas.  Most markets usually end the year with whimper, not a bang – so we certainly weren’t expecting to see this. But it is adding to 2010 gains for many programs, so we’ll take it while we can.

The question when looking ahead to 2011 is… are these moves sustainable? It looks an awful lot like the end of 2004, when a steady rise in stocks over the last weeks of December was followed by a sharp sell off in January.  Only time will tell if these markets can continue posting weekly gain after weekly gain, but the safer bet is that there will eventually be a correction. The million dollar question is when.

If you fall on the side of a correction is coming sooner rather than later, it may be a good time to book some gains in programs such as Accela, Clarke, Covenant, Hoffman, and Integrated Managed Futures which have come on strong in the second half of 2010. December has been an especially good month for those that were lucky enough to avoid being knocked out of long commodity positions in November.