Year-to-Date Total Returns
December 31, 1998

Current Standard Position: 100% in stocks (S&P 500) ··· Current Aggressive Position: 150% in stocks (S&P 500)
Cash (T-Bills) 4.9%
Buy and Hold 28.6%
Standard Model 35.5%
Aggressive Model 56.2%
Returns are total percent returns, including any reinvested dividends, but not including expenses or taxes. Cash is holding a money market in 90-day T-Bills. Buy and hold is holding the S&P 500 Index at all times, including reinvested dividends. Standard model is 100% in S&P 500 during buy signals, including reinvested dividends, and 100% in T-Bills during sell signals. Aggressive model is 150% long S&P 500 (dividends not received) during buy signals and 100% short S&P 500 (dividends not paid) during sell signals.  All model trades based on Monday closings.

Click Reality Check for actual performances since 1990.
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Market breaks out decisively from trading range low of 928 on January 9 through series of new records before settling into new and higher trading range in April-June.  Model follows suit as it moves from neutral 53 in January to supper bullish 100 in March-April, but then exhibits failing health into June as tape indicators come off of steroids, monetary environment remains benign, sentiment indicators weaken, and fundamental indicators continue meltdown.

Volatile market action May-June followed by upside breakout in July.   Model rebounds as tape indicators  firm, staying on buy signal while primary uptrend remains in place. 

Peak at 1187 on July 17 followed by selloff as technicals that monitor market internals deteriorate and join negative camp with sentiment and fundamental indicators.  Dramatic drops in model trip sell signal at July 31 close of 1121.  Continued market drops confirm that capital preservation is the new name of the game; cash "morphs" from trash to king as decline just stops short of a 20% bear-market loss.  Model breaches negative territory on Sep 4, stretching the envelope into new negative space and breaking its own record going back to the end of October in '87.

Rally in September supported by improved technical, sentiment, and monetary indicators, but stalls in early October as downtrend resumes.  Second Fed rate cut on October 15 pops market to middle of cycle, triggering new buy signal at the October 16 close of 1056, thus ending a successful sell signal.   Powerful rally continues into November, followed by a pause, a third rate cut, and a series of new all-time highs to 1242 into the end of the year, thereby confirming the record-breaking bull market dating back to 1990.   Model ends year at super bullish 93 reading, with strong tape and monetary indicators overwhelming weak sentiment and fundamental indicators.

Investors strictly holding cash in T-Bills earned a modest 5% for the year, while the S&P 500 rewarded buy and holders with a solid 29% total return, including reinvested dividends, extending its plus 20% streak of years from an unprecedented three years to a new record  four years in a row.  The standard model stretched the S&P gain to 35%, while the aggressive model had its best year of the decade by romping to a 56% gain, nearly doubling the S&P's return.