As you know the rally from the March lows has sent us into a selling frenzy and allowed us to take advantage of the cheap shares we bought as the markets fell apart.

This past decade has been the worst decade in history from a buy and hold perspective with all the major indices down for the ten year period starting in January 2000.

The model portfolio that we are working with right now was started in August 2008 and the markets are still down from the initial buy in for our holdings.

However, our portfolio is showing some decent profit considering that we had a great opportunity to buy into the market weakness and have since been able to unload those cheap shares as this market rally has continued to push higher.

Here are the most recent sell orders given by the software.

Sell 22 SPY at 112.66 for a total of 2,478.52

Initially we bought into SPY at 12.00 per share and have since had 26 buy orders and 8 sell orders. The net effect is our cost per share is now down to 106.50 and the holding is showing a profit. This is the value of the PCA system.

Sell 32 QQQQ at 46.05 for a total of 1,473.60

Our cost per share is now down to 38.85 and we are 67% in stock and 33% in cash on this holding.

Sell 13 IWM at 63.26 for a total of 822.38

Our IWM cost per share is down to 57.69 and we are holding 906 shares. We are currently 75% equity and 25% cash on this holding.

Sell 17  DIA at 105.47 for a total of 1,792.99

Our DIA holding is now 71% stock and 29% cash with a cost per share of 99.53. We are holding 804 shares.

In our sector portfolio we have GDX with a starting price of 34.95 and a current quote of 46.57. We are getting a hold signal right now with a buy price of 38.80 and a next sell price of 50.24. We have had 10 buys and 8 sells and our cost per share of 16.85. A few more round trips and these shares could be free! Once again, the power of PCA!

Sell 20 SMH at 27.62 for a total of 552.40

We started SMH at 30.41 and now our cost per share is 25.05 after 15 buys and 6 sells. We are 75% stock and 25% cash in this holding.

Our XLE holding started at 70.90 and now we are at 57.50. We have 370 shares after starting with 200 and our cost per share is 59.54. This position is 77% stock and 22% cash. 14 sells and 6 buy orders have been placed and we are holding for the next buy price of 48.12 or the next sell price of 60.62.

XLF is also in a hold pattern waiting on a buy price of 12.39 and a sell price of 16.20. This holding has had 11 buy orders and just one sell order and we are 85% stock and 15% cash.

Our GLD position is in a hold as well. With a next buy price of 85.08 and a next sell price of 111.75. This holding has issued 2 buys and 3 sells and we are 70% stock and 30% cash.

SLV is also a hold right now with a next buy price of 12.88 and a next sell price of 18.07. So far we are 3 buys and 3 sells and we have 478 of our initial 500 shares. Currently 51% stock and 49% cash.

In total our portfolio is showing a profit of 27,597 and all but one holding is still down from where we bought it.

The power of PCA is that it forces you to buy low and sell high and I have managed this portfolio in a very haphazard manner. Given more attention the results could have been even better!

The Indices portfolio is up 20,464 or 5.7%

The sectors portfolio is up 5,586 or 7.6%

The Gold & Silver Portfolio is up 5,657 or 24.3%

Finally our leveraged ETF portfolio is down 4,111 or 25.1% and was a bad idea to begin with.

I strongly recommend against using leveraged ETFs in the PCA system as the churn will kill your profit over time.

All in all I have to say… not bad! Total portfolio profit of 27,597 or 5.8% is a pretty good [performance given the fact that all holdings but one are lower than the entry price.

The PCA system of buying low and selling high automatically since August 2008 has been great. No one would have guessed back then how much damage could have been done to the stock market. Even more stunning has been the bounce of the March 2009 lows and now here we are.

From 2000 to now it has been the worst calendar decade in the history of the S&P500.

As we look forward to 2010 it was nice to get another chance to lighten up the holdings a bit more with these final sell orders. I look forward to another interesting year and we’ll be there to buy low and sell high every chance we get.

Happy New Year!

Sincerely,

Doug & Bill
Investing Systems Inc.

The other day I ran the model portfolio and took a few small sell orders in a couple holdings. Today I sat down to update it when I saw CNBC cheering the market at highs for the session and I got the following orders…

Sell 17 QQQQ for 749.53

Sell 7 DIA for 722.19

The market looks like it is approaching a critical mass with this rally.

We either have to break through a downward sloping trend line going all the way back to the 2007 highs, or we are going to break down through the support line going back to the March 2009 lows. Time will tell.

I had a good chuckle the other day when our beloved Jim Cramer came out with his new book “Getting back to even” which was written by “Jim” and his hair-brained nephew Cliff Mason.

If either one of them had a lick of sense they would be telling you what PCA software tells you… Buy Low & Sell High!

That is it.. the whole game. Diversify across industries, indices and commodities and let the market do what it wants. That is the ticket for long-term success.

So far it is working out pretty well for the ETF portfolio and the market is still way down from when we started.

Here is the selling I got today as the Dow hit 10,000.

Indices…

Sell 20 SPY at 109.31 for a total of 2,186.20

Sell 23 QQQQ at 43.16 for a total of 992.68

Sell 18 IWM at 62.34 for a total of 1,122.12

Sell 17 DIA at 100.023 for a total of 1,703.91

Sectors…

Holding on GDX 

Sell 15 SMH at 26.57 for a total of 398.55

Sell 12 XLE at 57.96 for a total of 695.52

Sell 21 XLF at 15.73 for a total of 330.00

Commodities…

Holding on GLD and SLV

The total portfolio is now up 3.9% and the  market is still down about 20% or so from our entry point. We keep taking these sell orders in case the market cannot sustain these levels, which I suspect it cannot.

I wanted to load up the cash side so that if we get another strong pull-back we will have some cash to take advantage of the bargains.

The portfolio is now up over 18,000 dollars and that is a good feeling after what we’ve been through.

Now that the market has “recovered” our boy Cramer wants to tell you how to get back to even… I want to tell you how to get ahead.

The market pushes higher into territory that we suspect cannot be sustained by historical standards.

The P/E on the S&P is over 140!

Unless we are in some new paradigm we have to see this market roll over soon and we will take some more sell orders here to free up cash for the next leg down.

Here are the sell orders for the model portfolio today.

Sell 12 SPY for 1,282.08

Sell  16 IWM for 978.40

Sell 8 DIA for 785.36

Sector Selling…

Sell 8 GDX for 391.28

Sell  13 XLE for 731.51

I will continue to take any sell orders that we get here and we’ll see what happens in the next few weeks. This market is going to be forced to make up its mind in the next few weeks.

To find out why, see our Sunday Night show at www.MarketToolbox.TV

Once again the market pushed higher and once again we are getting more sell orders.

Selling 13 SPY  for  a total of 1,371.63

Selling 21 QQQQ for a total of 880.74

Selling 18 IWM for a total of 1,082.52

Selling 12 DIA for a total of 1,167.48

Selling 16 GDX for a total of 761.60

Selling 13 SMH for a total of 328.25

Selling 10 XLE for a total of 543.80

Selling 5 GLD for a total of 511.40

Selling 40 SLV for a total of 683.20

The Total Portfolio Value of all holdings and cash reserves is now positive by 1.2% and we are holding a lot more shares than we started with. None the less our $5,670 gain is a great relief since the market has actually gone down about 20% on us.

PCA is a wonderful risk management style.

I updated the model portfolio recently and got a barrage of selling. As I expect the market to roll over a bit here and possibly for a while, I am updating the portfolio more often these days.

Today I opened it up and ran the quotes to discover another round of selling.

I will take this round of sell orders as well because I will want the cash on hand to buy back in at lower prices.

Here are the orders for the model portfolio.

In the Indices portfolio I am getting sell orders on SPY, 14 shares for 1,456.28

The QQQQ holding is saying hold and I will.

The IWM says sell 17 shares for 1,003.68.

The DIA is selling 10 shares for a total of 959.70

The Sector Portfolio is selling off a bit as well… here are the orders.

GDX is selling 15 shares for a total of 668.40.

SMH is selling 14 shares for a total of 345.66.

XLE is selling 9 shares for 478.08.

The commodities are all holding and we sold the entire QLD position as it was a bad idea to begin with.

Total portfolio picture is this…

We started with a portfolio value of 472,613 and now we have a portfolio value of 471,728 so we are down a mere 885 bucks or 0.2%.

That is not bad at all when you consider the prices of our initial purchases way back in August of 2008. The market had not really fallen apart yet and the collapse provided the buying opportunities to load up the portfolio.

We’ll see what happens going forward and since we have about a 25% cash reserve available we may get a chance to deploy more cash should we get considerable weakness from here.

With 75% of the portfolio invested, we could also get a chance to lock in more gains if the market pushes higher.

The beauty of the PCA strategy is having a plan in place no matter what.

Until next time…

Buy from the scared… sell to the greedy with PCA.

So, I though we were screwed as the markets fell apart after we started this model portfolio near the all time highs in the market.

But, PCA did exactly what it was designed to do and strategically deployed cash into market weakness.

We had weakness… lots of it.

The software went on a buying spree all the way down and loaded the boat on shares on everything we owned.

Eventually we stopped buying as some of the holdings actually depleted the cash reserves for each holding.

We did NOT add additional money to keep buying.

As things turned out… we had one heck of a market rally off the lows and as usual, no one saw that coming either.

We started with 11 holdings at a cost of 357,929.00 and  we have had numerous trades generated by the software.

Now we have only 10 holdings as I sold all of QLD. and took a 25% loss on the whole deal.

All told we are down about 1.4% on this whole portfolio and that is not too bad considering what people went through since we started this model portfolio back in August of 2008.

I am selling all of the QLD. It was stupid of me to even add a leveraged ETF to this portfolio.

Leveraged ETFs are a screw job the longer you hold them.

You get churned out of profits and there are better places to be.

Sold out. Lost 4,111.00 or 25% on this one… my bad.

Lesson learned.

Class dismissed.

Here is a sell on SLV.

61 shares for 965.02.

Now we have 53.7% shares and 46.3% cash.

3 buys and 2 sells have us up 19.2%

I am selling 11 shares of XLE for 571.67.

We are now sitting at 87.3% shares and 12.7% cash on this one.

14 buys and 1 sell have us down by 10.6%

Another wait and see holding.