The itsy-bitsy spdr...

Can the technology sector finally outperform after two years of underperformance against the energy sector?

When mo-mo dies...

The chart below lists 10 highest returning stocks from the NYSE and Nasdaq during 2004. Notice that a break below the December low in the 1st quarter of 2005 tended to signal a reversal of 2004's momentum, while stocks that did not break its 12/04 low continued to show momentum in 2005.

	12/31/04 close	12/14/05 close	12/04 low broken
NS Group	27.80	42.71	n/a
Mittal	38.65	26.46	1/05
Elan	27.25	12.40	2/05
Oregon Steel	20.29	30.34	4/05
Wesco	29.64	43.73	4/05
Bluegreen	19.83	15.82	1/05
CME	228.7	369.25	1/05
Goodrich	16.21	26.01	n/a
Martha Stewart	29.02	20.46	3/05
AK Steel	14.47	7.95	3/05
Travelzoo	95.43	25.37	1/05
Phazar	49.06	14.39	10/05
Dialysis Ctr Amer	24.43	10.35	4/05
Novatel	44.39	29.12	1/05
Taser	31.65	7.04	1/05
Parlux	22.48	30.46	4/05
Hansen	36.41	86.32	n/a
Coldwater Creek	20.58	33.46	4/05
NovaAmerican Steel	56.15	38.54	6/05
Kmart/Sears Holding	98.95	124.26	1/05

Beware of the ides of January

With the coming of the new year, portfolio managers tend to clean house and rebalance portfolios, often selling the mega-winners of the prior year. Conveniently taxes on capital gains recognized in January, whether short or long, are not due for another 14 months. If a big momentum stock breaks below its December low (see TZOO '05, TASR '05, but not AAPL '05 or TASR '04), be careful. The ride may not end for a long time. That means you holders: of AAPL, BTUI, GOOG, HANS, NDAQ, NTRI, PWEI, VPHM.

QQQQ outperformance testing resistance

When the QQQQ outperforms the SPY, the overall market tends to be strong. The action of the QQQQ between now and January should determine whether tech stocks are back for 2006.

Cartman and the Chartman say you must have discipline....

model strategy

In South Park, Cartman's karate teacher stressed the important of disclipine, a lesson which Cartman took to heart. Successful investing is no different. One component of investment discipline is sticking with a strategy....any strategy, which is better than trading aimlessly.

I maintain several different strategies, which I track via portfolios at marketocracy.com. By tracking the performance of my different strategies in a quasi-real-time way, I'm able to see what I do right and what I do wrong....which helps torefine and improve my core strategies.

1. History Repeating: based upon earnings and price momentum
inception: 8/16/05 alpha: 41.5
2. Ideal: based upon price momentum
inception: 6/10/05 alpha: 87.8
3. SPX: based upon price momentum, limited to the S&P 500 universe
inception: 8/5/05 alpha: 62.7
4. July: based upon price momentum
inception: 7/29/05 alpha: 88.6
5. Omni: mix of various strategies
inception: 5/9/05 alpha: 35.2
6. ADRs: mix of various ADRs
inception: 8/10/05 alpha: 53.9