Manager: Gerry Wollert
Model: Rebound Mutual Fund Trader
The month of April started on a down trend. And then, mid-month, the markets changed direction and trended higher for the balance of the month. This positive performance was encouraging given the continued civil unrest in Northern Africa and the Middle East along with the nuclear worries in Japan.
I am not a registered investment advisor and I do not try to predict what the market is going to do next month, next quarter, or next year. Rather, I rely on my momentum models and robust buy criteria to tell me when it is appropriate to be invested in the market.
After starting the month with less than 50% of my funds invested, I then got fully invested by the third week in April. I continue to be fully invested in my Rebound Mutual Fund Trader portfolio as we move into the Month of May.
I use an upgrading strategy to continually upgrade my portfolio with strong-performing ETFs. When they start to lag, I replace them with an ETF that is exhibiting stronger growth momentum.
Some people wonder why the market has continues to advance in the face of all of the bad news around the world. While no one knows for sure, I suspect there are at least four major factors influencing the market advances:
- The stock market looks out six months into the future. Investors are betting that the economy will continue to improve in the future without a double dip recession.
- There is a tremendous amount of money on the sidelines that will eventually get allocated to equities.
- The Bond Market, Money Market Funds, and Certificates of Deposit have not kept pace with inflation.
- Corporate earnings continue to exceed analysts’ expectations.
All three of my timing models (long, intermediate, and short term) are currently bullish. The markets may be a bit over-bought at the present time. The uncertainty in the Oil Market and other Commodities is also a potential depressant on the market. It is always wise to be cautious and keep a close eye on current holdings.
