Investors said good riddance to 2008 this week and didn't shed a tear doing so.  The calendar mercifully brought to an end a year in which the S&P 500 suffered a 38.5% decline, marking its worst showing since 1937!

For what it's worth, the market went out of 2008 like a lion as it roared to big gains this week.  Including Friday's rally, which got 2009 off to a banner start, the market surged 6.8% this week and has now gained 8% since the close of trading on Dec. 23.

We cite the latter date because Christmas Eve marked the beginning of the Santa Claus rally period, which spans the last five trading days of the year and the first two trading days of the new year.  We still have Monday's session to go, but unless the bottom falls out, it will be said that Santa Claus most definitely visited Wall Street.

The one hang-up for a lot of professionals is that Santa didn't bring many elves with him. 

Volume during the rally has been noticeably light.  The old adage is that volume equals conviction.  This understanding will put the market to the test in the coming week when Wall Street's legions return to their ranks. 

Once again, we saw the market virtually ignore bad economic news, of which there was plenty in this shortened week.

The S&P/CaseShiller Home Price Index declined 18% in October, which was the largest year-over-year decline on record and a telltale sign that the housing market is still searching for a bottom.  Separately, consumer confidence hit a record low in December.  The ISM Index, which is computed from a survey of national manufacturing conditions, hit its weakest point since June 1980.  The ISM added that new orders were at their lowest level since January 1948.

Weekly initial claims surprised in a good way, as they fell by 94,000 positions to 492,000.  The improvement seemed dubious, however, given the continued job cut announcements and the understanding that claims for continuing benefits jumped to 4.506 million from 4.336 million.

The labor market is weak and we will soon get another reminder of that reality when the December employment report is released next Friday.

There wasn't a lot of corporate news of note this week.  That is to be expected given the time of year, although there were at least two substantive developments.

The first bit of news was that a Kuwaiti petrochemical company pulled out of a proposed $17 billion joint venture with Dow Chemical (DOW) Monday.  In doing so, it raised concerns that Dow will be unable to complete its proposed acquisition of Rohm & Haas (ROH).

Shares of ROH dropped as much as 26% on Monday, but ultimately ended the week with a small gain after it was reported Dow was unlikely to be able to walk away from the deal.

GMAC, meanwhile, got word that the U.S. Treasury would make a $5 billion investment in the troubled financing company and would loan General Motors (GM) another $1 billion to participate in a GMAC rights offering that supports GMAC's reorganization as a bank holding company.

The market viewed this news favorably given that it will help support the extension of credit to qualified car buyers and help forestall any credit defaults by GMAC.

The bullish bias of this week's participants shined through in spades Friday when the market jumped 3.2% after the weak ISM number.  That was the best first trading day of the year since 2003, yet it had the one drawback of occurring on volume of just 1.05 billion shares.   For some perspective, consider that volume at the NYSE has averaged 1.43 billion shares over the last 50 days.

Still, the gains look good all the same on paper, regardless of volume totals.  If you have to sell stock, you are able to do so at higher prices than a week ago and that's all you can hope for as a motivated seller.

To be sure, being able to sell at higher prices in 2009 is all any investor can hope for given the year that just ended.

Here's to better conclusions for both the economy and the stock market in 2009.  Happy New Year!

--Patrick J. O'Hare, Briefing.com

**For interested readers, the S&P 400 Midcap Index, which isn't included in the table below, gained 7.1% this week and is up 2.4% year-to-date.