Looking at full-year 2010 returns in hind sight, it may appear as if 2010 was an easy year to make money. Those who are honest with themselves can recall the incessant chatter of gloom and doom and high levels of fear following the May 2010 'flash crash' and sovereign debt problems in Europe. After publishing Stocks May Surprise By Year-End on July 2nd, we got a few less-than-friendly emails questioning our sanity.

Fortunately, our market models (BMSI, 80-20) and historical studies enabled us to maintain some exposure to risk assets during a very difficult period.

Over the last few weeks, the inability of the S&P 500 futures to hold above 1,256 was of short-term concern. On November 5th with the S&P 500 at 1,224, we thought 1,256 was a reasonable short-term target. Once 1,256 was reached in December 2010, the S&P 500 futures had a difficult time holding above 1,256. As we kick off 2011, the futures sit currently at 1,263, which may clear the way for another push higher in stocks and inflation-friendly assets. Over the next few weeks, it is important that we keep an eye on investor sentiment.