What will the market do in 2010? Nobody knows for sure, but I'm pleased to say that although analysts are mostly bullish, their forecasts are tempered by a healthy dose of skepticism. This is a good sign since advisor sentiment is a contrary indicator.

The Investors Intelligence Percent Bullish Advisors Sentiment Indicator, shown in the Climate section of these Views, is at 51.1%. It peaked at 62.0% when the Mighty Dow hit its all-time high on 10/19/07, and it bottomed at 21.3% on 10/31/08, two weeks after I wrote an essay entitled, "Time to Buy." Given today's mid-range reading of 51.1%, I think there's still room for this market to move higher. But stock selection will be the key to making money.

In this regard, I want to further develop some of the ideas we have been exploring for stock selection and position entry. In particular, I like the idea of buying selected stocks when they have gone above the previous day's high. We demonstrated how this technique helps you pick winners and avoid losers in the "Strategy of the Week" presentations of 11/27/09 and 12/18/09. We even went so far in last week's SOTW presentation as to illustrate how the Buy-Stop-Limit order works for those of you who cannot watch the market during the day.

I liked this technique enough to consider using it to manage our Model Portfolios in 2010, but before deciding to do that, I did some additional testing. I ran some tests in which I combined the Green Light Buyer idea with the Daily Double idea using top VST stocks. Mr. Paul McCann, one of our whiz-bang developers, created a neat little search for me that looks at the top five VST stocks and finds those that went at least 1% above the previous day's high. I call it "Higher Ups" and we put it into the Strategies - Price-Volume Group of the UniSearch tool.

In a typical test, I ran a 10 stock portfolio in which I ran the search only when the Color Guard showed a green light in the Price column to buy stocks as needed the next day, and sold stocks that received 'S' Recs on three consecutive days. From 03/17/09 to 10/19/09, this portfolio was up 99.22%, but it took a hard hit over the next 10 days, down to 42.20%. Nevertheless, it ended the year up 67.88%. Not bad for such a simple strategy.

There are a lot of variations to this system and I plan to try some of them out. So beginning Monday, January 4, 2010, we'll be using them in managing our Model Portfolios of which there will be four: The Yellow Brick Road, Riding-the-Wave, Premier Growth Stocks and High Income Stocks.

This means that while we will continue to buy rising stocks in rising markets, we will no longer be using the 1% rule to enter the market. It's a good rule, but it misses too many good buying opportunities. Moreover, we will no longer feel obligated to buy baskets of stocks. We will be using selected Strategies to buy a few selected stocks, i.e., 1 to 3 at a time, that have risen at least 1% above their previous day's high.

My goal is to help you learn an end-of-day stock selection and portfolio management system that will be easy to do and consistently generate profits. That's what I want to accomplish in The Year Ahead.

THE MIDAS TOUCH.
If you've seen one TV commercial exhorting you to buy gold, I'll bet you've seen a hundred of them. I'll also bet you know that the price of gold has been on a multi-year tear and is projected to go much, much higher. But you also know that gold prices are very volatile and you have to know when to get in and when to get out. So how should you play this trade? Ms. Angel Clark, Research Strategist, knows and she's going to show you some of her innermost secrets on how to go for the gold. So join Ms. Clark at the VectorVest University to see this week's esoteric "Strategy of the Week" presentation: "The Midas Touch."