Our big prediction for 2011 is playing out perfectly.

In our only big prediction for 2011 we wrote:

Netflix (NASDAQ:NFLX) will post some blow-out results in January when it announces its latest financial results.

We could see Netflix shares rise from $180 to $220, $240 or more as the positive “surprise” will turn the final non-believers into believers.

Yesterday it happened. The Wall Street darling posted very strong results from the last quarter of 2010.

Netflix added a record number of subscribers. Earnings were up. Margins were up. Interest in Netflix is up too. Its shares jumped from $183 yesterday to more than $210 today.

Analysts are jumping over each other to upgrade their ratings. Bank of America, Morgan Keegan, Think Equity, and Pacific Crest have all upgraded Netflix.

No surprise here really. All the signals of a big quarter were there for Netflix.

It ran a great advertising campaign for the holiday season.

It has hit critical mass. Netflix has added more subscribers in the past six months than it did in its first six years.

Its leadership position has allowed it to expand its content line up.

Netflix seems unbeatable at this point. And that’s’ exactly why it’s almost time for the high profit potential second half of our prediction.

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Standard & Poor’s warned a lot more municipal debt downgrades are coming.

Does that mean the bottom is in for muni bonds?

Normally, it would be. S&P and the other members of the debt rating oligopoly have a long history of downgrading debt when a borrower’s problems are obvious.

For example, S&P cut Ireland’s debt rating from “AA-” to “A” last November the same day riots broke out in the streets.

It cut Enron to its lowest “investment grade” rating after shares plummeted from $80 to $7 and about a month before the company filed for bankruptcy.

In 2008, S&P downgraded 37 municipalities’ debt. Last year S&P was playing catch up again when it downgraded 343 municipalities’ ratings.

There are countless other examples, but you get the point. The rating agencies are extremely cautious when adjusting its debt ratings.

That’s why when the rating agencies start to officially acknowledge reality, you know the problem is about to come to a head. Right now, it’s muni bonds.

And in a market where the major indices have reached exceptionally high levels, assets like commodities and emerging markets which have the best fundamentals in correction mode, and “safe” long-term bonds pose more risks than they have in decades, contrarian investors should be getting the itch to make a contrarian bet on beaten-up muni debt.

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It seems like the proverbial canary in the coal mine.

Stocks posted their seventh straight week of gains.

The VIX (a.k.a. the “Fear Index”) has fallen to levels last seen when the Dow was above 14,000 in 2007.

Even 50 Cent made the headlines as a newly-minted stock guru. The rapper/mogul exposed his large twitter following to shares in an OTC Bulletin Board-listed penny stock that was marketing his new line of headphones. The tweet sent shares of the company from 10 cents to a high of 39 cents.

The bullish fervor and brazen disregard for risk is almost too much at this point. But despite it all, the top-performing asset of the past decade has fallen into a correction.

That’s right, gold has bucked the everything-goes-up trend and has fallen 5% over the past month. Some of the most ardent gold bulls have started to accept it can’t go straight up forever.

Even long-time gold and commodities bull Jim Rogers sees a pause in gold’s run. He warned last week gold is “overdue for a rest” and “may go down for a while.” He added that he still expects gold to hit $2,000 this decade despite the current correction.

So what’s a gold investor do now. Sell now, buy later? Wait it out? Or simply just continue to buy.

As usual, history provides an excellent precedent for how long the current gold correction will be, how long it will take to recover, and when to make your move back into gold stocks.

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Forget about the statistics, estimates, and computer models.

The future of the U.S. economy and where U.S. stocks are eventually headed is already playing out in India. They’re just coming together at a more accelerated place.

The recent sudden change in India shows exactly what’s likely to happen in the United States in the months and years ahead.

The impact of it all on most investors’ portfolios is going to be just as big too. Whether you’re on the good or bad side of that impact will be whether you see what’s going on there now, why it’s happening, and have good idea of when it’s going to happen. All of which are dissected below.

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The latest unemployment figures were released today and the results - as has been the case for nearly three years - were disappointing.

The market was expecting gains of 160,000 jobs. The Department of Labor estimated actual gains of 103,000.

In addition, more than a half million Americans gave up looking for work. So they’re no longer “unemployed.” And the official unemployment rate fell from 9.8% to 9.4%.

After 20 months of unemployment above 9%, the reception of the news was muted. Stocks, gold, oil, and copper, were essentially flat.

Behind the market indices reported on the evening news though, there was a real reaction in the markets (specifically, the market we consider the most important one in the world) that is set to have a continued impact on your portfolio in the short- and long-term.

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