Friday, January 29, 2010

Dow 13,000 by July 4th?

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

It's been a very eventful start to 2010 on both the political and financial market front with no change in sight.

As we turned the page on 2009, I contributed a piece entitled, “Stocks Could Be Shaky Heading In To January”. The basic premise was that although price momentum remained on the positive side, there were too many small cracks developing under the pavement that would result in a small pothole forming. Although the stock market put in a very nice first week showing, there was little in the way of follow through.

On a recent CNBC segment called Earnings, Economic Data & the Markets, I offered a 1-2% short-term upside versus a 4-7% downside, odds that certainly didn’t favor the investor. Last week, we saw a 5% pullback in the popular indices as a "sell the news" mentality hit many of the earnings announcements along with the political saber rattling and concern about a possible credit bubble in China.

As hard to believe as it may be after such a strong year in 2009, that small bout of weakness went a long way in removing much of the excess and froth in the markets. Investor’s Intelligence, a popular newsletter survey, saw a 20% decline in the number of bullish respondents, one of the most dramatic one week moves in 20 years according to Jason Goepfert of That means a large number of previously positive newsletter writers jumped ship on the bullish case, something you would fully expect during a decline. Since these folks are usually wrong when acting in masse, that’s one positive sign that at least a short-term low is close at hand.

Additionally, the veracity of the recent decline in stock market internals resembled other periods where at least a short-term low was being hammered in. Market internals are things like the number of stocks advancing and declining on a given day, the amount of volume going into stocks going up versus volume in those going down and the number of stocks making 52-week highs and lows. In “normal” market conditions, the behavior we’re seeing now in market internals is usually seen at or closer to bottoms than anything else. In short, this all looks like your typical bull market pullback, like July and October 2009, to cleanse and digest the enormous gains seen since March 2009 as well as force out the weak handed holders or “Johnny come latelies”.

So far, the Dow Jones Industrials have gone from 10,729 to roughly 10,100 on Wednesday morning. While the jury is still out in the very short-term on whether we’ve seen the absolute low, I really don’t think it matters. The Dow could rally a bit, see another quick bout of weakness below 10,000 before taking off higher again or begin its march above 10,700 right now. On balance, I believe stocks are going to see higher highs this quarter and even higher prices by the time the Yankees break for the All Star game just after July 4th.

Over my 22-year career, I’ve learned that I am a much better investor when I buy into weakness rather than chase prices higher. As such, although I came into January with a very large cash position, I have been and will continue to use quick downdrafts as buying opportunities until proven otherwise. My upside target on the Dow is a minimum of 11,500 with 12,000 and even 13,000 not out of the question depending on how the anticipated rally unfolds.

Making money in this business (and the markets) or not losing money sometimes boils down to being in the right place at the right time, no matter how hard you work or how strongly you feel about a position. As I've shared many times, there's nothing wrong with a little luck, which is said to be the residue of effort. I'd MUCH rather make money for clients than be right on my analysis. I would be perfectly happy being wrong all the time, but having my clients make money week in and week out, month in and month out and quarter in and quarter out.

There should be a sign that says "Successful Investors... Please Check Ego and Pride at the Door".

Please feel to email me with any questions or comments at

Until next time…

Paul Schatz

Wednesday, January 27, 2010

"Big Rex" Recalls

The Connecticut Department of Consumer Protection is alerting consumers to the U.S. Consumer Product Safety Commission’s voluntary recall of “Big Rex and Friends” Cloth Books, manufactured in China and imported by St. Martin’s Press, LLC, of New York, New York.

Consumers should stop using recalled products immediately unless otherwise instructed.

The books contain a red plastic dot sewn in the book which contains high levels of lead.

Lead is toxic if ingested by young children and can cause adverse health effects. There have been no injuries and/or incidents reported, however the potential for injury is high. This recall involves “Big Rex and Friends” cloth books. The book has a black and white striped border with a red dinosaur on the cover. The words “Big Rex and Friends” are printed on the cover. ISBN 031249260X or 9780312492601 is printed on the back of the book.

This product was sold nationwide at Barnes & Noble, Toys “R” Us, Amazon, Borders and other bookstores and retailers from May 2004 through October 2009 for approximately $9.

Consumer Protection Commissioner Jerry Farrell, Jr. strongly recommends consumers check their homes for this product and if found, cease using and remove from children immediately.

Consumers should contact St. Martin’s Press for instructions on returning the book for a full refund. For additional information, contact St. Martin’s Press toll free at (800) 347-9411 or visit the firm’s Web site at

Friday, January 22, 2010

Healthcare Stocks Continue to Ignore Healthcare Reform

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

During my 22-year career, there have been countless macro events that the stock market knew was coming. As far back as 1990 when Iraq invaded Kuwait, the market (and the world) knew of the deadline that the U.S. placed on Iraq to vacate Kuwait. With each passing day, as cargo plane after cargo plane landed in Saudi Arabia with troops and supplies, and more and more ships anchored offshore in the Persian Gulf, the point of no return got closer and closer.

When then-Secretary of State James Baker and Tariq Aziz from Saddam Hussein’s regime emerged from a last-ditch effort meeting and told the world that no deal had been reached in early 1991, the market reacted negatively, as expected, with war just days away. But a funny thing happened on the way to collapse, stocks stopped going down and began to stabilize. It was widely anticipated that a market sell off would ensue as the first bullets were fired.

As stocks rallied moderately into the day of reckoning, it was pretty hard to believe with a war against one of the most powerful armies on earth on their home turf imminent. And when the U.S. began the air assault on Jan. 16, 1991, the stock market took off like a rocket the very next day and never, ever looked back.

The point of this example and others like it is that the stock market is the single greatest discounting mechanism in the world. Investors shouldn’t try to anticipate what a reaction might be on an event. Just let the market tell you. As history has shown, fighting the tape or trend has been a futile exercise in most cases.

Since the presidential election in 2008, health care reform has been on the front burner for Congress and Barack Obama. I’ve written many articles since the inauguration arguing that no watershed reform was going to take place, simply because the health care stocks showed no sign of any concern. As the voices grew louder and both houses of Congress began crafting legislation, I remained firm in my conclusion, again, because the health care group was behaving extremely well.

If there was any chance that health care reform was going to dramatically change the landscape, those stocks would have seen significant institutional distribution, not the almost melt up move they’ve seen since November. It’s almost as if the sector has arrogantly thumbed its nose at Congress’ attempted fixes.

Whether or not meaningful health care reform passes, and I think almost everyone agrees we need some kind of reform, the relevant takeaway is that the stock market snuffed this out long before anyone else, just like it did with the first war in the Persian Gulf in 1991.

Keep an eye on the markets for future events to give hints as to the outcome!

Please feel free to email me with any questions or comments at

Until next time…

Paul Schatz

Monday, January 18, 2010

Watch Out for Insurance Rip-offs and Scams

HealthInsurance.Net is bringing attention to the latest health insurance scams and I thought I'd pass them along:

Beware of “discount programs.”
Sometimes health insurance is fashioned as a “discount program,” or a “members only plan” with terms that are hard to believe. These programs may offer a set fee for medical services provided by doctors in their network or discounts on some common medical treatments by physicians.
The discount program may offer other services for 20-30% off normal price; however, prices and covered services can be subject to change for any reason, at any time.
In some cases patients may go to the doctor under the assumption that the price provided at the time they signed up is fixed, but could end up paying a higher price for such services performed.
From time to time discount plans may be marketed as actual health insurance, but in some cases they are not, and are not subject to the same regulations or benefits.
Also, in some cases, consumers may find that of the original list of local doctors accepting the card, not all are actually still in business.
This is not to say all discount programs are health insurance rip-offs (most are probably legitimate and valuable programs), however, it's worth looking into the details to be sure you are getting what is expected from your program.

Do your homework when picking a health insurance broker
Only deal with a licensed health insurance agent.
One of the easiest ways to find a quality, local agent is to use an insurance agent network service like the one found at
These services provide quotes from multiple health insurance companies, rather than only one or two companies that may be provided from another source. This ensures all the best options are available.
A free, downloadable guide that outlines many of the differences in today’s health insurance plans is available at

Make a list
Families should compile a complete list of who needs coverage and what type of coverage they will need, i.e. coverage of doctor visits, prescriptions, and pregnancies.
In the list include ages, height, weight, and medical conditions or prescriptions currently and recently taken.

Commit to a budget that is realistic
After receiving quotes from a broker, review each benefit.
Compile a list of all questions or concerns, and return to the insurance agent. The agent is there to provide custom health insurance for each family’s needs. Health insurance coverage is probably one of the most important purchases that a family can make, be sure that the plan will work now and in the future.

Friday, January 15, 2010

Shopping for Credit Cards: Don't Look for East Street

December and January usually are the most active months for submitting credit card applications.

But in the wake of stiff industry restrictions ushered in by the Credit Card Accountability, Responsibility and Disclosure (CARD) Act and new U.S. Federal Reserve rules, consumers will have a harder time getting approved.

Bill Hardekopf, chief executive officer of and author of The Credit Card Guidebook, said applicants may be disappointed in the credit card offers they receive from issuers.

"Shopping and applying for cards is not as easy as it used to be. Consumers should now expect higher rates and lower credit limits. Approval is no longer a sure thing," he said. "Issuers are struggling to keep profitable, and they are trying to generate new revenue from their cardholders who are finding it difficult to make their card payments."

Still, getting a card with a lower rate can save money on interest and can be worth the effort.

Here are some tips for shopping for a credit card:

1. Start with your credit score.
Lenders make their judgment about your credit worthiness based on your credit score. A FICO score of 700 or more is considered very good; over 760 will usually qualify you for the best rates (up from 720 several years ago). A consumer with a score less than 640 will receive high interest rates and limited credit options.
Issuers will also use your credit score to determine the features of your card such as the credit limit and balance transfer terms. If you are surprised by your credit score, check it for errors. Correcting mistakes is the fastest way to raise a credit score.

2. Honestly assess how you will pay off the credit card.
You need to take a hard look at yourself to determine what kind of credit card customer you are. Will you pay off the entire balance each month on time or will you carry a balance? This will determine the type of card you need.
If you pay off your balance each month, consider a rewards card with no annual fee. Cash back reward cards are usually the best because you can use cash to purchase anything. Know that issuers have cut back on reward offers - 1% is now the standard amount for rewards of points or cash.
Also, pay attention to the reward tiers. Even though the issuer advertises a 1% cash rebate, it may take a certain level of spending to reach the 1% level. If you carry a balance most months, apply for a card with the lowest possible rate. The less you pay for interest, the more you pay toward your balance and the faster you can pay off that balance. Do not pay a higher rate just to get rewards.

3. Transfer your balance to a card with a lower rate.
Transferring balances between low rate cards was once an easy and profitable game for many cardholders. However, this lost money for issuers and the offers for 0% interest on your balance for twelve months have almost dried up. This year, balance transfer fees jumped from 3% to 4% and, in some cases, 5%.
"This is discouraging news for consumers who are placing hope in balance transfers. However, if your APR has been increased significantly, your issuer may be forcing you to try to find another card with a lower rate," Hardekopf said. "Before you begin the process of transferring your balance to another card, contact your issuer and ask them to lower your current rate. This doesn't happen as often as it used to, but it doesn't hurt to ask."

4. Pick one card and apply for it.

Compare three or four cards. Study the terms and conditions of these cards, then select the best one and submit an application. "Limit the number of applications that you submit because each application is recorded as a credit inquiry on your credit report. Multiple applications are a red flag that can lower your credit score because people actively seeking credit are typically a higher risk to lenders than people who are not seeking credit," Hardekopf said.

5. Avoid store cards.
Do not apply for a store card just because the store gives you an immediate discount on your purchase. The interest rates are usually much higher than an average card, often above 20%. If you don't pay off the balance in full the first month, you could pay much more in interest than the money you saved.

6. Pay attention to your rate.
Most rates are now variable and they will increase in the future as the Federal Reserve raises the prime rate.

7. Only apply for credit if you need it.
Do you really need a new card, or can you work with the cards that you have? Most consumers carry too many credit cards which leads to further temptations to spend. simplifies the confusion of shopping for credit cards. It is a free, independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards, rebates, balance transfers and lowest introductory rates.

11 Shockers for 2010

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

Each year, I usually release a small list of off the wall things that I think have some chance of occurring. Some shockers are repeats. Obviously, I hope that all of the less than positive ones don't happen. This is not my forecast for 2010, which I hope has a better chance of coming true!
In 2008, I said the whole Dubai experiment would fall apart along with private equity and the dollar would embark on a new bull market. Not bad, right? But I also called for a new bull market in stocks to begin in the US and Japan, the Euro to see 100 and then countries would start pulling out.

Last year, I predicted a 50% stock market rally from some low, another private equity collapse, sovereign debt default and a 10% savings rate in the US. Non-financially, I said families would begin moving back to the major city centers and larger suburbs and away from rural life. I coupled that with a sharp rise in new network television comedies and the return of family importance.

For 2010, here's my list in no particular order:

1 - At least one major European country defaults on its debt

2 - The Euro sees a country leave, causing further strains in the union

3 - A municipal bond crisis unfolds in the US

4 - Heading into its third decade of deflation and economic ruin, the graying and flat population of Japan begins to open its borders to immigration and remilitarizes, hoping to shock and stimulate their economy

5 - Aided by a resurgent economy, the Democrats retain both houses and Congress and super majority in the Senate

6 - Tim Geithner resigns from the Treasury citing personal reasons to spend more time with his family and embark on a career in the private sector, payback to him for having helped Wall Street "swindle" hundreds of billions from taxpayers.

7 - Treasury bonds end the year as one of the top performing assets

8 - Citibank is broken up and sold off in pieces and loses its name

9 - Goldman Sachs goes private since the benefit of being public, added capital and huge leverage is no longer there

10 - Citizens of Iran rise up against their government and begin a revolution. Iran responds by attacking Israel in an ill-conceived attempt at rallying public support behind a collapsing government.

11 - The stock market peaks during the third quarter and a new bear market begins.

12 – The Jets win the Super Bowl. Hey, I can dream! (actually, it’s San Diego)

Please feel to email me with any questions or comments at

Until next time…

Paul Schatz

Monday, January 11, 2010

Not-so Instant Credit Card Approvals

We're always getting hit, especially while holiday shopping, with offers for new credit card accounts at department stores and other retailers. That's likely to continue, but next month the U.S. Federal Reserve will put the brakes on issuing credit credits with little scrutiny during shopping frenzies.

Starting in February, applicants will have to give more information, including income.

Bill Hardekopf, chief executive officer of and author of The Credit Card Guide Book, said that despite protests from retailers, a new study shows that extra screening is needed to make sure applicants can pay for the new debt they will be incurring.

During the November collection period, about $1 of every $8 of receivables was written off as uncollectible, according to Fitch's December Retail Credit Card Index released Thursday.

This is one of the highest levels in history (the all-time high charge-off rate of 12.81% was set in August 2009). Fitch predicts retail card chargeoffs to remain high through the first half of this year.

"This is another example illustrating that consumers and issuers need to be realistic about debt. If you can't afford to pay off the loan in a few months, even if it is a credit card loan, you can't afford the loan. The Federal Reserve is correct to require retailers to verify income. It is a good idea for all issuers, not just retailers." Hardekopf said. "Easy lending may help borrowing and spending in the short term, but many Americans and banks have learned the hard way about the consequences."

Of the families that have credit cards, 96.1% have bank cards, 56.7% have retails cards and 11.9% have gas cards.

Coming Friday: Tips on How to Apply for Credit Cards from

Friday, January 8, 2010

Top 9 Tips for the Successful Investor in 2010

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

It’s amazing how powerful the turn of the calendar can be.
New Year’s resolutions dominate the landscape with all of the weight loss programs and products at the top of the list. I’ve never been a huge resolution person, probably since there’s just too much I need to change and it’s a little overwhelming!

But each year, I may pick one single project that needs to get done and is manageable. This year, my office resolution is to be paperless by this time next year, not exactly sexy or exciting, but important, nonetheless.

As investors turn the page from the bounce back year of 2009 to 2010, here are 9 items to consider.

1 – Take a financial inventory of your current holdings.
Make a list of all holdings on a piece of paper or Excel spreadsheet of their values at the end of 2008 and 2009. Determine the composition of your portfolio: What percent is in stocks, bonds, currencies, commodities, cash, etc.? Try to understand why something did better or worse than expected and consider adding or withdrawing where appropriate.

2 – Asset allocating among stocks and bonds hasn’t worked well all decade and it’s unlikely to work in the next decade.
Modern Portfolio Theory (MPT) may not be dead, but it’s critically wounded and has hurt hundreds of thousands of retirees this past decade. If your portfolio doesn’t own other assets, like currencies, commodities and protection against inflation and deflation, it’s long overdue!

3 – Beware the “Money Magazine Jinx”.
What worked well in 2009 isn’t likely to be repeated in 2010. When the popular publications like Money and Fortune give kudos to a particular investment’s success last year, it’s usually close to the end. That’s been the case the vast majority of the time in bull and bear markets. Be VERY careful chasing the winners!

4 – After a horrific climate in 2008 where most asset classes were decimated, 2009 was the bounce back year where most people began to feel better and their portfolios stabilized, worst case.
Don’t get complacent and think we’re going to party like it’s the 1990s all over again. It’s going to take years and years to fix all that ails us and we haven’t seen the last trap door or sink hole. Stay active and focused!

5 – State and local tax receipts are falling faster than Tiger Woods’ sponsor list.
Given how the economy fell off the cliff in 2008, this wasn’t hard to predict, but who ever said politicians could effectively budget? States like California, Arizona, Florida and New Jersey have enormous budget deficits, not to mention the trickle down effect to counties and towns. I have grave concerns that a municipal bond crisis isn’t too far off and defaults will follow.

Muni bonds inflows reach record levels over the past year or so as investors chased yields so there’s an awful lot of air to be let out of that market. Be very selective on what you buy and stick with the most pristine municipalities, even if that means lower yields. If you tend to buy bond funds, diligently check how much leverage (borrowed money) they use to juice the yields higher. Nuveen is one company that built a business on it. To paraphrase Mark Twain, be more concerned about return OF principal than return ON principal!

6 – Not a new worry, but the biggest risk to the financial markets and economic recovery is politicians running amuck, especially in a hugely important midterm election year.
The nasty partisan politics we’ve seen is only going to get worse and that’s just not good for investors. Believe it or not, the stock market typically performs best when Congress is split, gridlock.

7 – Don’t be fooled by the temporary reprieve in the real estate market.
It may rally a bit, but the two biggest tailwinds of the past 25 years, declining mortgage rates and easy access to capital, are no longer blowing. With so many potential homebuyers no longer able to secure a mortgage, organic demand will fall for years to come. I think the best case for real estate is flat prices this decade.

8 – With trillions of dollars being printed by the government for a variety of programs, and budget deficits soaring as far as the eye can see, investors should prepare for higher taxes across the board.
By doing nothing, the Bush tax cuts will expire this year and tax rates will rise. But I don’t think Congress will leave it at that. Call them fees or surcharges or however you want to spin it, the government is going to dip into our pockets more than they have in a long time!

9 – If you’re confused, want to bounce an idea off someone or would rather not handle your own portfolio, seek the help of a qualified professional.
Look for someone who offers independent advice as a Registered Investment Adviser (RIA) and not just a product salesperson. An RIA is a fiduciary and by law, must put clients’ best interests first, and follow the prudent man rule. Hiring a professional could be a nice topic for a future entry.

Please feel free to email me with any questions or comments at

Until next time…

Paul Schatz

Thursday, January 7, 2010

Thinking Green for the New Year

Electricity supplier Direct Energy is encouraging Connecticut consumers to extend their energy-saving habits into 2010 by adopting one or two resolutions that are focused on using less energy around the house.

“We don’t have an energy problem in North America, we have an energy-waste problem,” said Cory Byzewski, vice president and general manager of Direct Energy. “Residents can take control of their energy usage and spend in 2010 by adopting simple energy savings steps into their regular routine.”

According to a survey commissioned by Direct Energy, roughly 31% of Connecticut residents have adopted a New Year resolution in the past, and most plan to do so again in 2010.

For the other 69%, Direct Energy is offering some resolution ideas for saving a bit of green – both financially and environmentally – this year:

Invest in timers and resolve to use them.
Leaving the front porch light on when away or through the night gives a certain sense of security; it also keeps the meter turning and racks up dollars throughout the year. Ditto for the living room lamp left on while the house is empty due to travel or vacation. A little here and there won’t break the bank, but added up throughout the year, it’s a significant waste of energy and money.

Timers and motion-sensors can bring that same feeling of security while also avoiding unnecessary energy usage – but the survey showed that only 33% of Connecticut residents ever use them. It’s a fairly inexpensive investment requiring little change on the consumer’s end. But it can have a positive impact on annual energy costs, while making the house look occupied even when it’s not.

Shop the post-holiday sales for more efficient lighting.
Consider using some of those gift cards toward purchasing LED (low-emitting diode) holiday lights when they go on sale in January; they run cooler, last longer, and use 10 percent of the energy an incandescent bulb does.

Stock up on compact fluorescent light bulbs (CFLs) for year-round use inside your home. They also last a lot longer and use much, much less electricity for the same lighting as their incandescent counterparts.

Use a programmable thermostat.
Resolve to buy one and use it, or to actually set yours and not override it. Programmable thermostats allow consumers to cool or heat their homes only when it’s needed, and avoid running the cooling or heating system for an empty house.

Turn it off and unplug it.
How many times have you found the television watching the room in your house? Remember to turn off lights and electronics whenever you leave a room and unplug anything that isn’t in use to prevent electronics from consuming power even when they’re not on. The simple flick of a switch and pull of a cord will help you conserve energy.

Commit to preventative maintenance.
This can be as easy as changing the filter on the heating or cooling system on a regular basis to avoid the buildup of particles that make the system work harder than it needs to and can avoid unnecessary wear and tear on the system’s components. To maximize the efficiency potential, resolve to have the system checked annually by a qualified technician who can help diagnose problems before they cause system down-time at the least convenient moment – like the next family gathering.

Understand your electricity pricing plan.
Make sure you know who your retail electricity provider is, what type of plan you’re on (whether it can change from month-to-month or depending on market changes, or whether it’s fixed), what the length of your agreement term is, and when it expires.

“We all can stand to use a little less energy without really impacting our comfort and lifestyle. At the end of the day, the less you use, the less you have to pay,” said Byzewski.

Friday, January 1, 2010

Stocks Could Be Shaky Heading In To January

(Editor's Note: Paul Schatz, President of Heritage Capital, LLC, in Woodbridge, will be contributing to Fi$callyFit every Friday. Read his biography here)

Last week, I wrote about some of the year-end tricks, games and trends that we often see in the stock market. One of them, the January Effect, where the most beaten down stocks that make new 52-week lows during the fourth quarter tend to rise from mid December to early January as tax loss selling abates. Look at stocks like COGT, GMXR, PCS and SQNM as examples that worked this so far this year. But similar to 2003 when the market made its low early in the year, the overall trend is somewhat muted to date and there are still dozens of January Effect candidates waiting to make their move.

The last week of the year predictably saw anemic volume as so many traders and portfolio managers took time off and closed their books early. Overall volume hasn’t been strong for several months, but that should change beginning next week when everyone wipes the slate clean and comes back to work at point zero.

Heading into the New Year, we have some interesting crosscurrents that should resolve themselves in early to mid January. On the plus side, the major indices closed the year near their highs for 2009, so momentum is in the bulls’ favor. On the negative side of the ledger, sentiment has become very bullish, which usually precedes a market pullback or flat out correction. Two major sentiment surveys from Investors Intelligence and American Association of Individual Investors are showing more bulls now that we’ve seen in a very long time. So many bulls is a negative since the market often confounds the masses at extremes and by being bullish, it usually means an investor has already committed funds to the stock market. As I’ve mentioned before, this is called a contrary indicator.

Adding fuel to that fire are the options traders who are exhibiting very bullish behavior. These usually wrong folks at extremes have pushed the put/call ratios (ratio of options volume) to warning levels usually seen at short to intermediate-term market peaks. Given that the last rally occurred on such light volume, I would have to give the nod to the bears as we come into January. It will be interesting to see what happens after the third trading day as investors begin to settle in and position themselves.

Finally, it was a very disappointing last five trading days of the year for the bulls. The trend called for strength, but this year was rather quiet with only the Nasdaq 100 showing just a fractional gain. Given that, the next trend calls for the S&P 500 to outperform the Nasdaq 100 during the first five days of the New Year with the Russell 2000 (small caps) and S&P 400 (mid caps) to also show some outperformance next week. These are trades I look forward to executing each year since there’s not much debate as to when to initiate and exit, and the winning percentage has been strong.

Let me take this opportunity to wish you a very Happy, Healthy, Safe and Prosperous New Year! May the world find peace and you have the best year of your life!!

Please feel to email me with any questions or comments at

Until next time…

Paul Schatz