Entering March, our model spotted signs that January to early February's price weakness was giving way to a developing bullish trend potentially laying the foundation for further strengthening.  Though most major indices were still negative for 2010, the Stadion model signaled a favorable risk environment, and all tactical portfolios were fully invested by the end of the first week of March.  With price, sentiment, and breadth indications all positive, we remained fully invested the rest of the month allowing us to participate in this powerful uptrend.  
 
Our simple philosophy is to be invested when the expectations for positive results are in our favor. We depend on our well-defined sell discipline to help protect portfolios against adverse market movements when they occur.  As pleased as we were to side-step volatility in late January and early February, we were even more pleased to participate in March's upswing. 
 
Looking back over the last year (since the bear market low on March 9, 2009),  20/20 hindsight might suggest the ideal positioning would have been to simply buy and hold. But this would be contrary to all we've learned over 10 years of the current secular bear market.  Most short term, emotional decisions, whether resulting from the ecstasy of rising markets or the agony of falling ones, are wrong.

In the last year, repeated pullbacks just short of an 'official' correction (defined as a 10% decline from peak to trough) have shaken the market.  In a single year we experienced more pullbacks (5 with an average decline of 6%) than any other time since WWII.  To invest well requires discipline.  What drives decisions at Stadion is the right combination of technology, rules and discipline, not emotion.
 
The unprecedented frequency and depth of 2009's aftershocks may have magnified investors' fears of a recurrence of 2008's dramatic decline.  Each pullback was news-driven; a series of reactive sell-offs by investors unwilling to risk dramatic losses like those experienced in 2008. But with time memories dim. Investors are now "buying" these dips as they become more complacent about the possibility of another significant downturn. But no one knows whether this bullish trend is anything more than an uptick in a 10 year long secular bear market. 
 
At Stadion, we react to what is happening right now versus attempting to predict where the market might be headed.  Even our market-reactive (vs. predictive) model can be wrong, but over time it assures we won't stay wrong for long. This means you can rest well at night knowing that even when we have one foot pressing the throttle, the is other poised over the brake.