Market Comment 01 09 11

While the long-term technical picture and the underlying fundamentals of the market remain quite positive, the short term picture has become a little less optomistic.  We were stopped out of a number of positions as the market experianced an increase in intraday volatility.

We view market pullbacks and signs of weakness as a potential threat to our account values.  All larger declines start with smaller declines. Since nobody can really know what the future holds, we have to rely on our stop-loss strategy for account protection.

Markets at the beginning of a new year typically have a lot of cross-currents. Market participants and money managers begin repositioning accounts for the coming year. The following S&P 500 Sector Performance Chart shows investors are rotating out of the basic materials and consumer staples and into the technology and health care sectors.

(Click on chart for easier viewing)

QQQQ and XLK are examples of ETFs that are technology oriented.

XLB is an example of an ETF that represents the basic materials sector.

Click here to view the GWM Equity Sector Rotation Model Strategy.