Despite a close lower on Friday, the bulls had every reason to break open the champagne and raise a glass.
Stocks put in their best December in about two decades with the S&P 500 posting a 6.5% gain for the month.
And looking back at the entire year, the S&P climbed 12.8 percent, the Dow added 11 percent and the Nasdaq surged 16.9 percent.
To the chagrin of the bears, the market is now trading at pre-Lehman levels.
But for 2011, investors find themselves at a crossroads. Companies are starting to hire, manufacturing is picking up and banks are starting to lend.
However, China is slowing down, interest rates are rising and housing prices are going nowhere.
With plenty of bullish and bearish catalysts influencing the market, should you position for further gains or a sharp sell-off?
Instant Insights with the Fast Money traders
Brian Kelly tells the desk he’s fairly bullish into 2011. “As long as the Federal Reserve continues with QE2 I’d expect stocks to continue higher,” he says.
He also points to the surprising resiliency of the consumer. "Just look at what happened at Disneyland this week," he says. "The crowds were so big they had to close the gates."
But Kelly concedes the potential of a housing double dip presents challenges. Should home prices decline significantly, it would create a strong headwind for the banks, he says.
True to his contrariarn nature, Steve Cortes leans to the bearish side. He doesn’t like the action in the Shanghai Composite, which he says has performed terribly; the weakness he feels is emblematic of China's slowdown. In turn, that presents headwinds for commodities. “I don’t believe there’s enough commodity demand without China to keep this bull going.”