Happy New Year – Traders are still on holiday with little to show for a weeks worth of trading.  There was some tax loss selling and window dressing but other than that it was a good week to take a snooze.  I did see traders fill the gap at the opening on Friday.  Normally the Dow drifts sideways to down in the lunch hour but today they took their profits and went home.  Here is a look at the S&P 500 in 2009: 

For the year, the S&P 500 closed UP 23.45% compared to a loss of 38.49% in 2008. 

The Daily Predictor shows the S&P 500 at a good Exit point.  The Weekly Predictor continues its Hold signal on the S&P 500.  The Summation “Trend” Index made good calls throughout 2009:

Do you see that little dash of red at 864.72?  That little bit of red shows a change in trend.  The S&P 500 Bullish Percent Index has been positive since December 10th:

Earnings season will start in the next two-weeks which should tell us if the market is going higher or not.  Personally, I think there should be plenty of earnings surprises to the upside during Q4 of 09. 

As a retired Certified Financial Planner, I never bought in to Strategic Asset Allocation or Buy and Hold.  Strategic Asset Allocation rebalances based on the calendar say Quarterly or semi-annual.  It sells your best asset classes and buys your worst under performing asset classes.  The problem with Strategic Asset Allocation is that investors have to sell at distressed levels and nothing will hurt your net worth more that. 

Strategic Asset Allocation adjusts your asset allocation based on market conditions.  Technical analysis of the market is used to adjust exposure to various asset classes.  Before the Predictor came to me, I used the 50-day moving average for my first adjustment.  If the 30-day moving average fell through the 50-day MA, a second adjustment was made.  Crossing through the 200-day MA was always the straw that broke the camels back.  The Predictor Sell Signal came on May 20, 2008 and the Buy Signal came on March 11, 2009.  You must trade with the trend or your will lose.  It is as simple as that. 

After I retired, I wanted to pass my money management technology on to others and help a worthy cause at the same time.  All royalties from my book Manage Your Own Money goes to charities that care for abused, sick, or injured animals.  Here is a link to Amazon.com:

http://www.amazon.com/Manage-Your-Own-Money-professional/dp/1439202117/ref=sr_11_1?ie=UTF8&qid=1221072523&sr=11-1

Happy New Year from our family to your family!

Dan Clemons author Manage Your Own Money

This video shows The Predictor trading JNJ:

http://www.youtube.com/watch?v=cNk7Et2G1TM

This Video discusses 10 things every investor should know:

http://www.youtube.com/watch?v=Omg9ymZAJ6k

S&P 500 Predictor and Summation Buy and Sell History

Special note:  Summation Buy and Sell signals are not valid when the market is Trending.

Predictor Sell on October 1, 2009 - Predictor and Summation Buy on October 8, 2009

Summation Buy on July 9, 2009 - Summation Sell September 22, 2009

Predictor Buy on March 11, 2009 – Predictor Sell on June 1, 2009

Predictor Buy on November 24, 2008 – Position Closed by Summation Sell on January 13, 2009

Predictor Buy on July 21, 2008 – Position Closed by Summation Sell on September 9, 2008

Predictor Buy March 17, 2008 – Predictor Sell on May 20, 2008

Bond investors are holding on to yields locked up during the financial crisis.  Low yields to maturity did little to attract a bid last week.  Even CD activity was quiet.  A picture is worth a thousand words so I’ll just show you what the fixed income market looked like in 2009.  Candlesticks show the yield on the 10-year US Treasury and the solid line is the price of a 30-year bond.

As you can see yield has increased while bond prices fell.  The 10-year US Treasury closed the year at 3.85% up 3 bps on the week.  I expect yield to go higher in 2010 as bonds prices fall.  

Unfortunately, there was no Bond Buy of The Week.  All I saw was greedy desperate dealers posting asking prices above par.  Smart bond investors will be keeping maturities short in order to take advantage of higher interest rates in late 2010.   

For intra-day updates on bonds, I look to Briefing.com/:  

http://www.briefing.com/Investor/Public/MarketSnapshot/BondMarketUpdate.htm

How much money to allocate to individual bonds and how much money to allocate to bonds maturing in years 1, 2, 3, and 4 can be found in my book Manage Your Own Money.  

My current bond trading strategy looks for Investment Grade Corporate bonds and CDs maturing in 12-months or less.  The reason to stay short is because inflation is coming sooner than we might think.  I look for bonds that are mispriced giving me a higher yield to maturity than another bond of the same issuer maturing within a few weeks of each other.  Don’t forget that short maturity’s reduce risk more than any other measure.  It is always smart to avoid companies on Credit Watch.  Staying well diversified, limiting the number of bonds invested in any one company, and checking with Moody’s before making a purchase will add confidence to your trade.  Since bonds are backed by shareholder equity, it is smart to require a share price of $10 or more!  Here is a short video showing bonds available on the Bond Desk:

http://www.youtube.com/watch?v=rEj68ZZGwTw

The most bond friendly broker dealer is named in my book Manage Your Own Money.  All royalties are used to care for abused, sick, and injured animals.  Who will care for them if we don’t?      

Happy New Year from our house to your house!

Dan Clemons author Manage Your Own Money

All royalties from the sale of Manage Your Own Money are donated to charities that provide care for abused, sick, and injured animals.  Our last donation went to the Best Friends Animal Society of Utah here:  http://www.bestfriends.org/aboutus/.  Thank you for helping to support this very worthy cause.

Daniel J. Clemons author Manage Your Own Money

To watch a short video of Dan Clemons describing how to manage a 401k plan click here:

http://www.youtube.com/watch?v=UfSQY-JlEWs

To read what others are saying about the book, click here:

http://www.amazon.com/gp/reader/1439202117/ref=sib_dp_ptu#reader-link

To put The Predictor on your desktop click here:

http://www.amazon.com/Manage-Your-Own-Money-professional/dp/1439202117/ref=sr_11_1?ie=UTF8&qid=1221072523&sr=11-1

Want an Exit Strategy to avoid corrections and bear markets?  The Predictor guides the investor in and out of positions with precision.

Everything that is super important for you to know about money is included in my book, which you will find on sale for $26.60 right now at Amazon.com a 21% discount!  

With very warm wishes,    

Dan Clemons author Manage Your Own Money

Important Disclaimer

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. Prices, values, or income from any securities or investments mentioned on my blog may not be in the best interests of the investor and the investor may get back less than the amount invested. Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate. Where an investment or security is denominated in a different currency to the investor’s currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor. The information contained on these pages does not constitute advice on the tax consequences of making any particular investment decision. This material is not intended for any specific investor and does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation of particular securities, financial instruments or strategies to you. Before acting on any recommendation on any material presented, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice.