Trading signal occurs in iETF model portfolio: Sell EWH, Buy EWT
There was not much action on the Wall street for the last week of the year. The S&P 500 index closed this week at 1257 up 0.07%, the Dow Jones Industrial Average increased 0.03%, and while the technology laden Nasdaq composite index lost 0.48% for the week.
Today is the last day of the year. Stocks closed this year with a double digit gain again, second year in a row. For the year, S&P 500 index went up 12.8%, Dow Jones Industrial Average increased 11.0% and the Nasdaq composite index gained 17.4%. However, the year-end numbers did not tell the whole story. All the gains actually came from second half of the year. Stocks started 2010 with a mild correction in January and continued their 2009 rally into April. However, with US' economy stimulus running out, Europe's debt crisis creeping up, and China's slowing down, investors started worrying about that the fragile recovery would fail and the economy would dipped back to recession. Lacking the investors' confidence, major indexes plummeted for 3 months from April to July. During this time, S&P 500, DJIA, and NASDAQ gave up 23%, 20%, and 27% from their high respectively and were 7% - 8% below where they started at the beginning of the year. Although the economy data have been bad, the company earnings remained strong. With support from company earnings, stocks stopped the downward spiral and slowly climbed back. In addition, to keep the economy recovery on tack, the Fed has maintained the easy money policy, which also helped stock markets. Economy data eventually turned the corner, and stocks has been going up since July.
As U.S. economy seems to be on a growth path again, I expect that commodity and energy price will continue to rise in 2011, and auto industry will continue its recovery as these sectors have been occupying the top ranks in the SELECT ranking table for a while. Technology and small caps usually lead the way in the economy recovery phase, and I also expect that they will outperform the general market again next year. Low interest rate and slow but robust growth are what I think we will experience in the next year. On the global front, emergent markets are trying to control their growth and fighting inflations. They are also trying to change their export oriented economies into domestic consumer oriented economies, and these changes will make their growth more robust. Overall, I am optimistic about 2011.
To welcome the new year and to reflect my optimism, I have changed the color scheme of this blog to a brighter tone as well as the background picture. I also turned on the mobile viewing template for easy viewing from smart phones or i-pod touch (got to keep up with the mobile life style ^_^). Happy new year!!
