Saturday January 3, 2015

As we closed out 2014, the big picture for 2015 looks upbeat. The long term uptrend beginning in October 2011 looks to be able to stay intact for a while. However this should not be interpreted to mean that the coming year will be smooth sailing all the way. Pullbacks, big (i.e. October -7.4%) or small (i.e. December -4.9%), are sure to happen within the long term uptrend. With the Fed’s QE out of the way, earnings will likely become a more important driving force than they were in the past several years. For the coming year my thoughts for the S&P 500 performance range are 2285 on the high end and 2130 on the low side. 

Portfolio performance for the year 2014 fell short of my personal objectives, but not by much.  I began the year with the expectation that between day trading Options and trading the Alpha process the beginning capital of $60,000.00 would be doubled.  The year end results for the Alpha One Model Portfolio came in at slightly in excess of $117,000.00, not quite doubling the initial capital.  On Friday January 2, 2015, $57, 694.89 was rolled from the Alpha One Model into the Alpha Two Model and was invested in the thirteen holdings of that Model.  Once again the beginning capital is $60,000.00 in the Alpha One model and my expectation is that the equities will outperform the S & P 500 by a significant margin and the day trading of Options will equal or surpass the 2014 results.

The Alpha One Model is now invested at 78% Long and 22% Cash fairly close to the current Asset Allocation Recommendation of 75% Long and 25% Cash.  I will be keeping a close eye on the short Watch list with particular attention to $FB and $FFIV in the coming week.

Short term momentum is turning bearish as we say good-bye to the Santa Clause rally. You will note below that the Market Model for the NASD has turned to Bearish with the remainder of the members of this group showing signs of technical weakening also.  There is lots of optimism that earnings will keep bulls going in 2015, as both consumers and business will benefit from a lower oil price. Earnings season will be upon us in less than two weeks. Until then, expect news driven volatility to remain relatively high. The technical condition of the major indexes points to more pullbacks.

Happy New Year and successful trading!