Click Reality Check for actual performances since 1990.  Click Timing Model and Trading Model for descriptions of  models.

Market rocks out of the gate in January, jumping from 1229 start to record first week, u-turning past the starting gate next couple of weeks, and streaking once more to new record 1280 by end of month.  New 1999 timing model starts year at 65, but trends in opposite direction to market by end of January, as its sluggish but positive technical  indicators detect weakening internals and suspect over-buying, its monetary indicators ease back to still bullish stance, its sentiment indicators stay negative, and its valuation indicators remain comatose.

Early February market pullback gives back nearly all of January's gains.  Market enters trading range through February, while timing model extends downward trend, as market internals and monetary conditions deteriorate further.  Yet, timing model remains on persistent buy signal.  New Trading Model enters the fray and agrees with  timing model's bullish assessment.   Violent intraday market swings  spook investors even as March-May rallies shoot S&P to series of new record highs.

Market retreat into second week of June triggers sell signal on June 13 for trading model, with the S&P at 1294, as timing model eases into its neutral zone.  Market spikes to series of new highs through mid-July, as timing model clings to buy signal and trading model refuses to confirm positive outlook.  Timing model joins trading model by issuing sell signal with the S&P at 1357 on July 25, under pressure from deteriorating but still positive technicals and monetaries, weak sentiments, and nonexistent valuations.

Primary downtrend confirmed in September as S&P decline from the July high exceeds 10%.  Bearish pattern traced into October, printed by succession of lower highs and lower lows.  Dramatic surge in late October trips trading model buy signal on October 31, with the S&P at 1363.  One week later trading model switches back to sell signal at 1370 on the S&P.  Rally to 1396 into November 12 encourages yet another buy signal from trading model.  S&P breaks trading range with new records in mid November and early December.  Trading model sees possible double-top and issues sell signal at S&P 1417 on December 12.

S&P closes year at record high 1469, confirming new primary uptrend, while models stubbornly remain on sell signals.  Investors strictly holding cash in T-Bills earned about 5% for the year, while the S&P 500 gifted buy and holders with a 21% total return, including reinvested dividends, extending its plus 20% streak of years from an unprecedented four years to a new record  five years in a row.  Many major indexes also had a stellar year: Dow up over 25%, Nasdaq a stunning 85% plus, and 22% for the Wilshire 5000.   But... the narrowness of the market required the right index funds and stocks:   More stocks were down than up for the year; the NYSE Composite gained just 10%, as did the average S&P 500 stock.

The timing model did a good job of detecting early on the 12% S&P decline into October, but remained insistent that the year-end 18% rally will be short-lived.  Y2000 will tell the story here.  Meanwhile, model standard portfolios were left behind, with the timing portfolio registering a respectable 12.8% on the year and the trading portfolio booking 11.8%.  The aggressive portfolios did poorly, at 3% and just above breakeven for the timing and trading models, respectively.  All in all, a disappointing year for the Y1999 models... but one that holds lessons for the upcoming Y2000 revised models.

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Copyright © 2000 Richard Mojena. All rights reserved. The information presented here may not under any circumstances be resold or redistributed for compensation of any kind without prior written permission from Richard Mojena. www.mojena.com

Disclaimer
Specific and personalized investment advice is not intended by this communication. Its contents are for the public record as a free public service. Information is based on the analysis of past data and assessments by the models. Future performance may not reflect past performance. Profitable trades are not guaranteed. No system or methodology ensures stock market profits. No guarantee is made regarding the reliability or accuracy of data. In other words, use this stuff at your own risk!