So 2009 went down in the books as a very good year for the stock market as the S&P 500 gained more than 20%, but as almost anyone will tell you, Wall Street looks at the future and the past means very little. What will the stock market look to for direction in 2010? Can the stock market make it two winning years in a row?

2010 is shaping up to be a decisive year for both the stock market and the overall economy. 2008 started the deep recession and it continued into early 2009, but the end of 2009 brought high hopes that maybe the economy and the market had turned the corner. 2010 will be the year where we find whether things actually get better on the bottom line or if the recent gains were just because of false optimism.

What kind of things will be tracked most closely to determine whether the turnaround is real? First and foremost is the jobs market. The notion of a “jobless recovery” is silly to me, because I simply don’t believe we can have a real recovery without the jobs market firming up. In addition to this we will need consumers to feel more comfortable, but really I think consumer confidence and retail spending are quite closely tied to the job market and how confident consumers are about their situation or their job prospects. Since the consumer accounts for 70% of the GDP in America, we clearly need a healthy consumer.

The stock market outlook for 2010 is quite unclear and stock market predictions are all over the map. Some analysts are expecting a V shaped recovery and a continued huge run up in stocks, while others are looking for a return to the bottom that was hit in early 2009. In my opinion this year will be a year of digestion for the stock market. The market needs to digest last year’s big gains and figure out whether they were built on a solid foundation or not. Expect economic data to take on increased importance this year as investors look for signs of where to move their money next.