Stock markets will close the year in another two days and I do not expect they will change much. The S&P 500 index began this year with 903, continuing the spiral downward tend from the end of last year due the the economy meltdown. It reached the low of 682 on March 5, losing 24.4%. As the economy stabilized, the stock markets rebounded and their momentum turned from negative to positive. By the end of March, the weekly stochastics of S&P 500 index has climbed over 50, and our FEMKX trading system, which is based on stochastics, also issued a buy signal on March 30. However, after the sever down turn, these signals were treated with cautiousness. The confirmation of the signal came in mid-April when the S&P 500 index closed above its 28 week moving average, and all of our model portfolios issued "buy" signals. After the index broke through the moving average, it hovered around the trend line for 3 months building the base and then took off from there in July. Year-to-date, the S&P 500 index gained 24.8%, the Dow Jones Industrial Average increased 20.2% and the NASDAQ composite index went up 45.3%. The technology sectors are leading the way as in any economy recovery phase.
Our stochastics based FEMKX timing model, turned in the best performance this year again. It issued the "buy" signal first in March and still holds the position with a gain of 82%. nSSPp and SELECT model portfolios delivered the second best performance with a gain of 55%. nSSPP bought into FEMKX in April and traded it for ARGFX in August and still holds ARGFX. SELECT moved from cash to FWRLX in April and subsequently made two other trades. It currently holds the FBSOX. The SSPP model portfolio made 3 trades this year with a gain of 27.5% outperformed the S&P 500 index a bit. The ETF, iETF and sETF model portfolios are under performing the S&P 500 index this year. ETF model portfolio made 5 trades and gained only 10%, sETF made 5 trades as well but gained 24%, and iETF made 4 trades making 17.5%. The higher volatility nature of these funds made it difficulty to develop good solid gains as their holding periods seldom last more than 90 days.
Economy recovery is gaining its foothold and the government stimulus programs will keep coming next year. Next year should be a prosper year and I hope it is even better than this year!
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