What Will Drive The Market Now? (UNH, AET, F, TM)

A year ago, the Dow Jones limped along at 6,547, barely breathing and leaving investors searching for something - anything - to drive the market back up. Now, at 10,579, the Dow Jones is up 61.2% - but the options for improved growth are dwindling.

The first year of a recovery is always the easiest, because everyone wants to take advantage of universally-low prices. But, once the easy pickings have dried up, it becomes harder to find that new surge or fuel. The drive over 10,000 was fueled by a rise in financials and in tech stocks. Now it appears as if the drive is tapering off for both sectors, which begs the question: What next?

Some say that health stocks will lead the way. If the health care reform bill is passed, though (and all signs indicate that it will be, in some form), companies like UnitedHealth (NYSE: UNH) and Aetna (NYSE: AET) may take a hit and experience only minimal growth - especially if a public option or restrictive premium caps are put into play later.

Others report that energy will be the fuel for 2010. While there are great prospects for energy, I actually think that auto stocks are the way to go.

Auto stocks? Really? Hear me out.

I remember when Ford (NYSE: http://www.benzinga.com/stock/F>F) was hovering around $4 a stock back in late 2008. Now, it is up to 12.97, far above its previous 52-week average like I predicted a few weeks ago. It is also making all the right moves in an industry where almost everyone else seems to be severely screwing up. I'm looking squarely at you, Toyota (NYSE: TM).

We may also be seeing an IPO from GM in 2010, which is sure to provide a boost and an opportunity for investors to grow their portfolios. Add in this to the fact that Japanese imports are reeling and you could see a marked rise in the market fueled by increased demand for domestic vehicles (and fueled by small-caps connected to the auto industry).

While we're on the topic of small caps, I think that is where a huge chunk of the growth will be in 2010 and 2011. The Obama administration is becoming increasingly friendly towards small businesses and smaller corporations, especially since the bad taste in America's mouth left by large-cap disasters is still there. I believe the next 12 months will be the perfect time to pump money into small-cap venture projects and entrepreneurial efforts.

So, in short, small-cap trading and the domestic auto industry will be, I believe, the movers behind the next market surge - either over the next 4-6 months or towards the beginning of 2011.