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Hits and Misses Since Nasdaq 5,000

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It's been 10 years. What have we learned and what are we poised for right now?

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Editor's Note: This article was written by Richard Suttmeier, chief market strategist at ValuEngine.com, which is a fundamentally-based quant research firm in Princeton, New Jersey, that covers more than 5,000 stocks every day.


The 3-Year auction was awarded at 1.437,
just above my semiannual pivot at 1.432. The bid to cover was solid at 3.13 with 52% awarded to indirect bidders, which include central banks.

Today's auction is $21 billion in 10-Year Notes with my semiannual pivot as a resistance at 3.675. This auction could have a tougher time than Tuesday's 3-Year auction.


Source: Thomson / Reuters

On Thursday the US Treasury auctions $13 billion re-opened 30-Year bonds


Source: Thomson / Reuters

The 30-Year is an important auction with semiannual support at 4.823 and semiannual resistance at 4.543. A breakout to higher yields is a drag on equity valuations, which in one year have gone from extreme undervalued readings to having nine of 11 sectors overvalued.

My Market Timing Hits and Misses Since the Turn of the Century

Ten years ago, on March 9, 2000, I told investors that the Nasdaq wouldn't sustain gains above 5,000 and recommended reducing Nasdaq exposure by 50%.

In the second half of 2002 and in March 2003, on the day our troops began the march to Baghdad, I was what I called the "Lonely Bull".

Moving forward to March 2007, I predicted recession in 2008/2009 and for a bear market to be confirmed by the end of 2007. My call in October 2007 was that the Dow wouldn't sustain gains above 14,000 and that the next 2,000 points were down, not up.

In March 2009 I predicted a 40% to 50% rally off the low telling subscribers to cover shorts and go long.

I predicted a sinking market in the summer of 2009, so I missed the 20% rally from that point. The ValuTrader model portfolio gained 9.8% from July 13 to the end of 2009. The model portfolio was balanced until heavily weighed to the short side in October 2009.

I shifted to the long side on February 8, 2010, with the Dow near its year-to-date low of 9,835. The ValuTrader model portfolio shifted from two longs and 18 shorts to 14 longs and six shorts.

At Tuesday's open I shifted to neutral with the model portfolio at 12 longs and 12 shorts. While the Dow may have another 10% to the upside, the downside risk is 20%. When the upside is less than 10% I tell investors to use strength to reduce longs and increase shorts. Year to date the model portfolio is up 6.0%.

The Popping of the NASDAQ Bubble


Source: Thomson / Reuters
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No positions in stocks mentioned.
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