Friday, January 28, 2011

Markets Tumble As Egypt Protests Intensify

On Friday the markets tumbled as the Egypt protests intensified.

The markets had broken out to the upside, with the the Dow breaking through the 12,000 mark and the S&P 500 breaking through the 1,300 level. Given the intermarket volatility and the breakdown of recent market leaders these were a reassuring sign that the market could continue to drift higher. The hopes of a continued march higher were dashed however as the Egyptian protestors swelled in ranks and the situation intensified. In Egypt, protesters took to the streets by the thousands and the government rolled in tanks, sparking a flight to safety in markets worldwide. As I write, the Dow Jones Industrial Average futures are down an additional 169 points.

I have been on close guard of late, watching for a potential market correction. Bearish clues were emerging in the last few weeks. I was prepared to protect client accounts as needed. I did in fact sell the great majority of stock oriented holdings and a couple bond funds today. I also added a small amount of the gold etf (GLD) to the Inflation Hedges folio. Earlier in the month I reduced portfolio risk by liquidating higher risk assets, such as IWM and MDY (Small Cap & Mid Cap ETFs). As a result our portfolio declines have been minimized.

If these events are the catalyst for a correction, I would expect a correction of no more that 6 to 8%. For now, the longer term trend remains to the upside.

Monday, January 24, 2011

Broad Market Sectors Rotation 01 24 2011

Small and Mid size companies are bouncing back a little today after last week's declines. Due to the hightened risk in the market at the moment I favor the Large and Mega Cap stocks such as those found in the Dow Jones Industrial Average. They are a safer alternative for now.

Bond Market Update 01 24 2011

High Yield (junk) Bonds have continued to be the bond market leaders the last few months.

Friday, January 21, 2011

QQQQ & XLK Liquidated earlier in the week

Below are the closing numbers for Friday the 21st. The NASDAQ continues it's under performance.  The ETFs, QQQQ and XLK represent key components of this index. I liquidated these positions earlier in the week.

Industrials and Energy continue their relative outperformance.

Broad Market Sectors Rotation 01 21 2011

Large and Mega Cap stocks held up well, while Small Cap stocks have suffered the most during this market downturn. Early on, I rotated out of small company oriented holdings such as IWM (small-cap ETF).

(Click on chart for easier viewing)

Thursday, January 20, 2011

Smart Stops for 01 20 2010

(Click on chart for easier viewing)

Video Spotlight - Is the Trend Still Intact?

Brian Shannon - Is the Trend Still Intact?

Brian Shannon, creator of the Alpha Scanner, is a professional stock trader. We are primarily longer-term investors but we can still gleen great insight from someone like Shannon. Listening to the first 10 minutes or so of the video will help put the recent down move in the market into perspective.

Click on the Video Spotlight Icon to view video.

Monday, January 17, 2011

Apple's Steve Jobs to take medical leave

Apple announces that Steve Jobs, Apple's CEO,  will take a medical leave of absense. The stock is down sharply in European trading. The NASDAQ 100 futures are also trading lower. This could be the catalyst that brings on the anticipated market correction.

Apple is one of our holdings in the GWM Market Leaders Folio. Thankfully it is a very small position. Earning will also be reported this coming week. This may create a buying opportunity. Last time he took a medical leave the share price fell, then recovered and went on to gain 60%.

Sunday, January 16, 2011

The Trend is Your Friend Until it Isn't

We continue to ride the market trend higher. This will not go on forever; so we will enjoy it while it lasts.

(Click on chart for easier viewing)

Friday, January 14, 2011

Smart Stops for 01 13 2010

Below is a chart listing our short-term smart stops for non-mutual fund holdings. If the price of a position drops below the short-term stop price Smart Stops notifies me by email.  Upon receiving the notification we sell the position at the next available window.

By looking at the current price in relation to the listed short-term stop price you can see that risk is substantially mitigated. Sometimes after getting stopped out, the price bounces back relatively quickly and we may end up buying the position back at a higher price. We call this event a whipsaw. While whipsaws are negative we view them as the price of insurance for protecting accounts from large losses.

(Click on chart for easier viewing)

The Right Sector at the Right Time

The following sector analysis performed by Bespoke Financial confirms that the GWM Equity Sector Rotation Model is currently positioned in the right sectors at the right time.

(Click on chart for easier viewing)

Tuesday, January 11, 2011

Folio Institutional Statement Viewing Instructions

Click on the Submit button for instructions on viewing and printing your account statements.

Sunday, January 9, 2011

Market Comment 01 09 11

While the long-term technical picture and the underlying fundamentals of the market remain quite positive, the short term picture has become a little less optomistic.  We were stopped out of a number of positions as the market experianced an increase in intraday volatility.

We view market pullbacks and signs of weakness as a potential threat to our account values.  All larger declines start with smaller declines. Since nobody can really know what the future holds, we have to rely on our stop-loss strategy for account protection.

Markets at the beginning of a new year typically have a lot of cross-currents. Market participants and money managers begin repositioning accounts for the coming year. The following S&P 500 Sector Performance Chart shows investors are rotating out of the basic materials and consumer staples and into the technology and health care sectors.

(Click on chart for easier viewing)

QQQQ and XLK are examples of ETFs that are technology oriented.
XLB is an example of an ETF that represents the basic materials sector.

Friday, January 7, 2011

2011 Tax Law Changes

Below is a link to a Wall Street Journal article on the 2011 Tax Law Changes.

Click the link to view the brief article.

Important GWM Website Navigation Tip

Your online account viewing page merely lists your holdings by symbol, including today's price and possibley an abreviated name associated with the symbol. On the GWM Website we provide a link to a Google Financial page that describes each of your holdings in detail.

Click the Submit Button below for tips on navigating to Holding Detail page on the GWM Website.

Thursday, January 6, 2011

Stopped out of two more positions

The market has been showing some downside volatility in a number of sectors. The US dollar has been rising; consequently oil and other commodities have been falling. Both foriegn and US stock have also been showing signs of stress.

We were stopped out of another two positions today.

Tomorrow's employment report is widely anticipated. We are expecting an improvement in the employment numbers. A good report would be a plus for the market.

Tuesday, January 4, 2011

Market Comment 01 04 11

Commodity related stocks and commodity based countries suffered a reversal today. Flooding in  Austrailia, a commodity rich nation, has become very a real problem. Mining and agriculture companies have taken a big hit. We were stopped out of EWA, our Australian ETF.

Commodites in general were hit today. Given their big rise last year and because of their inherent volatility, I felt it was prudent to take some of our basic material and country ETF holdings off the table. We will see how things settle out before re-entering this sector.

(Click on chart for easier viewing)