Market Report

2009 Performance Table and Multi-Year Chart

12/31/2008 04/21/2009 YTD Chg %YTD Chg

DJIA 8776 8799 23 0.3%

S&P 500 903 946 43 4.8%

Nasdaq 1577 1859 67 17.9%

S&P 500 Large Cap Index -- 2007 to present

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You get practical access to our stock-market timing work through our model portfolio. The portfolio-timing work can be used to mimic or to gauge results in your own personal portfolios.
Perhaps most important, you get access to our independent "Market Commentary" analysis along with our "Current Equity Market Outlook" column where we cover the U.S. equity markets using our favorite proxy, the S&P 500 Large Cap Index. Studies have shown that 4 out of every 5 U.S. stocks follow the general direction of the S&P 500. That's why it is extremely important to align your equity portfolio accordingly. We aim to profit from multi-month trends in stocks by buying during periods of fear and selling during periods of euphoria; thus utilizing the forces of standard deviation as the invisible hand of the Market inexorably moves stocks above and below mean valuation levels.
AgoraReport.com will:

Expose the myth that buy-and-hold investing is the best way to navigate all market environments.
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About AgoraReport.com:

AgoraReport.com is published in a suburb of Washington, D.C.; run by a small group of active investors.
AgoraReport.com is a completely independent entity. We have no ties to financial-service firms or publicly-traded companies. We neither pursue, nor do we accept promotional fees or advertising fees. In short, no conflicts of interest.
Our mission is to provide unbiased, hype-free information that you can use to increase your returns in the equity market.

Current Equity Market Outlook

A bear market for stocks began in October 2007. Bear markets, on average, last approximately nine months. This bear market has exceeded the norm. We expect a continuance going forward ushering in lower prices.

Market Commentary

By Jacob F. Cabbiness
Date: June 14, 2009

Be On Guard!

"Doubt is not a pleasant condition, but certainty is absurd."
~ Voltaire

The rally in the S&P 500 Composite Index (SPX) --our proxy for the broad U.S. equity market --since the early March lows has been quite impressive, up nearly 40%. As such, market pundits -- who were extremely bearish and caught unawares in early March when the current rally began -- are lining up to proclaim a new bull market. To be sure, the pundits may be correct; however, what investors are not told is that the current rally could roll over into precipitous declines at any time. In fact, the market may now be at a bearish inflection point.

Below is a long-term chart going back to 1980 of the SPX showing monthly price action. Notice that, during bear markets (boxed areas) price is often propelled downward from the 10-month moving average (blue line). Decisive movement above the 10-month average usually heralds a new bull market. Price is currently at the 10-month average. As a bear market currently persists, the probability of failure necessarily exceeds that of success.

For the record, we believe the chance of a new bull taking off from here to be quite dubious. Indeed, we believe investors should remain vigilant.

Nimble traders are presented with an interesting risk/reward proposition to the downside. Keep an eye on our Speculative Portfolio in the weeks ahead for speculative trades.

Recent Market Commentary Archive

Market Commentary Archive -- March 8, 2009

Market Commentary Archive -- April 21, 2009

Annual Performance Tables

2000 Performance

12/31/1999 12/29/2000 YTD Chg %YTD Chg

DJIA 11497 10787 -710 -6.20%

S&P 500 1469 1320 -149 -10.10%

Nasdaq 4069 2471 -1598 -39.30%

2001 Performance

12/29/2000 12/28/2001 YTD Chg %YTD Chg

DJIA 10787 10137 -650 -6.00%

S&P 500 1320 1161 -159 -12.00%

Nasdaq 2471 1987 -484 -19.60%

2002 Performance

12/28/2001 12/31/2002 YTD Chg %YTD Chg

DJIA 10137 8342 -1795 -17.70%

S&P 500 1161 880 -281 -24.20%

Nasdaq 1987 1336 -651 -32.80%

2003 Performance

12/31/2002 12/31/2003 YTD Chg %YTD Chg

DJIA 8342 10454 2112 25.30%

S&P 500 880 1112 232 26.40%

Nasdaq 1336 2003 667 49.90%

2004 Performance

12/31/2003 12/31/2004 YTD Chg %YTD Chg

DJIA 10454 10783 329 3.10%

S&P 500 1112 1212 100 9.00%

Nasdaq 2003 2175 172 8.60%

2005 Performance

12/31/2004 12/30/2005 YTD Chg %YTD Chg

DJIA 10783 10718 -65 -0.60%

S&P 500 1212 1247 35 2.90%

Nasdaq 2175 2205 30 1.40%

2006 Performance

12/30/2005 12/31/2006 YTD Chg %YTD Chg

DJIA 10718 12463 1745 16.30%

S&P 500 1247 1418 171 13.70%

Nasdaq 2205 2415 210 9.50%

2007 Performance

12/31/2006 12/31/2007 YTD Chg %YTD Chg

DJIA 12463 13265 802 6.40%

S&P 500 1418 1468 50 3.50%

Nasdaq 2415 2652 237 9.80%

2008 Performance

12/31/2007 12/5/2008 YTD Chg %YTD Chg

DJIA 13265 8776 -4489 -33.8%

S&P 500 1468 903 -565 -38.5%

Nasdaq 2652 1577 -1075 -40.5%

Long-Term Charts

S&P 500 Large Cap Index -- 1980 to Present

Dow Jones Industrial Average -- 1980 to Present

Nasdaq Composite Index -- 1980 to Present

Cyclical-Bear Market Performance Table

The current bear market began in October 2007. Here's a breakdown:

S&P 500 Large Cap Index -- Oct 2007 to Present

Index	09-Oct-2007	12-Jun-2009	Change	% Change
S&P 500	1565	946	-619	-39.6%

Cyclical-Bull Market Performance Table

The last cyclical-bull market began in 2003 and ended in Oct 2007. Here's a breakdown:

S&P 500 Large Cap Index -- March, 2003 to Oct 2007

Index	12-Mar-2003	09-Oct-2007	Change	% Change
S&P 500	789	1565	776	98.4%

Market Sentiment Indicators

An invaluable tool of savvy traders, sentiment indicators are used to identify levels of optimism or pessimism present in markets. Unusually high or low levels of optimism or pessimism can signal proximity to market tops or bottoms on both a short term and long-term basis.
Investor Intelligence Sentiment Survey: monitors the market sentiment of more than 100 independent investment newsletters. When the bull and bear spread (percentage of bullish less bearish advisors) falls to -20 or thereabouts, pessimistic sentiment is at its peak, which usually heralds a bottom (short term or trader's) in the market. An example would be 30% bullish and 50% bearish (with 20% neutral)

Data as of: 10-Jun-2009

CBOE Volatility Index ($VIX): a measure how much fear is in the market based on premiums in option contracts on the S&P 500 Composite Index. Option premiums rise as put options are purchased to protect portfolios from market declines. A rise to 30 in the $VIX has reliably presaged past bearish environments. Over the past year, however, readings far above this level have occurred reflecting panic moves in the market.

Credit Market Watch

Intelligent investors regularly monitor credit markets for signs of stress. Widening spreads can presage trouble in equity markets.

The Treasury - EuroDollar Spread ($TED) otherwise known as the TED Spread, reflects the difference in yields between LIBOR (private interbank) loans and three-month U.S. Treasury bills -- often referred to as T-bills. When financial trouble occurs, or is anticipated (such as recessions, etc.), banks are often loathe to lend to each other. As such, LIBOR rates tend to rise relative to T-bill rates which are considered risk free. Widening spreads are indicative of contracting credit availability which tends to inject dis-inflationary pressures to the economy reducing output. Spreads of 100 basis points (1%) have, in the past, been associated with tops. During panics, however, spreads can increase. During the panic of 2008, spreads widened to over 450 basis points (4.5%) to a record high.

Articles of Interest

In accordance with Title 17 USC Section 107, materials are distributed for fair use and educational purposes
(This Section Updated Periodically During The Month)

Economist: Housing bubble caused Great Depression, too

BELLINGHAM - Nobel Prize-winning economist Vernon Smith draws some disturbing parallels between the events that led up to the Great Depression of the 1930s and the severe economic slump of today.

The government bond glut

Since the majority of today's politicians, it appears, have no greater joy in life than spending somebody else's money, it is not surprising that they have exploited an atmosphere of panic during the onset of the recession to force through gigantic public spending programs that are now coming into effect, almost all of which bear no relationship whatever to economic recovery.

Debriefing Jeremy Grantham

The co-founder and chairman of GMO on why he believes China will be a disappointment and what he would ask Alan Greenspan.

Q&A: Jim Rogers Isn't Buying a U.S. Stock Recovery

The legendary investor is sticking for now with the two Cs: China and commodities.

Current Strategy

(This Section Updated As Market Conditions Warrant)

Model Portfolio Allocations:

Model Speculative Portfolio

Long Equities Short Equities Cash

0% 0% 100%

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