As 2011 winds down an interesting pattern is playing out in the S&P 500 as shown in the chart below of SPY, an ETF that tracks the S&P 500. Currently, we are seeing lower highs and higher lows resulting in a symmetrical triangle or what is called a coiling market. As this triangle created by the price action wedges tighter, you can see that we are getting closer to a possible breakout in one direction or the other. As of this writing on 12/28, there is a good chance that we will see this breakout and a new trend develop with the start of the new year. The good news is Stadion’s Investment Model keeps us well positioned in our tactical portfolios; a break to the upside could see us back invested or with a downside break our safety measures should keep us on the sidelines.
Brad A. Thompson, CFA, Chief Investment Officer
SPY is the market symbol for units issued by SPDR S&P 500 ETF Trust, a Unit Investment Trust. SPY seeks to provide investment results that, before expenses, generally correspond to the price and yield performance of the S&P 500 Index. SPY is a managed fund that incurs fees and charges. The S&P 500 Index is the Standard & Poor’s Composite Index of 500 stocks and is a widely recognized, unmanaged index of common stock prices. It is not possible to invest directly in indexes (like the S&P 500) which are unmanaged and do not incur fees and charges. Past performance is no guarantee of future results. Investments are subject to risk and any of Stadion’s investment strategies may lose money. Any references to specific securities or market indexes are not intended as specific investment advice and should not be relied on for making investment decisions.
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