Daily Market Snapshot 04 27 2012

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 Then click the large white X in the upper right corner to return to the blog)


Daily Market Snapshot

Stocks are in rally mode

 

Market Direction Model

Green = Buy
Yellow = Nuetral
Red = Sell

Trendline Analysis

Trend reversal to the upside. Bottom of the Trend Channel is a good buy point.

The Bulls have taken control. I have now re-deployed 75% + of our available cash in all GWM Model Portfolios. Our Market Direction Model is confirming the upside market reversal.

The market has risen for a few days in row. Any minor pullback next week will be bought.


Go Getter Model Portfolio Side Note:

New America Folio

The New America Folio is volatile. Proper timing and risk management are critical when investing in high growth stocks. The stocks I buy in this folio have the highest fundamental and relative strength characterists; they are on the cutting edge of their industry groups. They are generally, but not always, smaller companies with the highest growth rates: consequently, they are rarely cheap and can make big moves, both up and down.

As I have learned from my fellow members in the HGS Investors group, the best time to take positions in these stocks is at market reversal points, when a correction has run it's course and market begins a new rally phase, ie, right now.

Below are charts illustrating some recent trades:

Sold - Flotek Industries

No one ever went broke taking a profit.

Bought - Starbucks

Starbucks slumped after reporting earnings that beat
analyst expectation by just 1 cent. I added to our position on the dip.

Starbucks is beginning to expand in China. It turns out that folks in China not only
like tea but love $5 coffee.

It has taken me some time to learn the nuances of high growth stock investing. I believe that certain styles of investing can really only be learned by studing under a mentor. The HGS Investors group has provided me such mentorship. I am extremely greatful to the group, in particular Ian Woodward (analyst), Ron Brown (analyst) and Dr. Jeffrey Scott ( living proof that even an oncologist can make money in the market).

This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.

Daily Market Snapshot 04 26 2012

Daily Market Snapshot

Getting Better
Bulls are winning

 

The Woody Indicator

(Volatility Indicator $VIX)

Volatility has come down into the safe zone once again.
This is bullish

Market Direction Model

 

- Getting Better -
More Green as Numbers Increase

I added positions in all Model Portfolios today as our market indicators strengthened.
 
It is earnings season. Individual stocks are being pushed up or down in a big way depending on these earnings report releases. So far the results are about 60% positive and 40% negative.
 
Should the market really be rallying on this news? Fundamentals, i.e., company earnings, are extremely important when evaluating individual stocks. When it comes to market direction however, the technical, i.e., price and volume, aspects trump fundamentals.
 
Markets often defy logic. This is the reason so many smart people have trouble investing successfully. As you are well aware by now; I always let the market be my guide; when the music is playing you got to dance.
 
 
 

This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.

Daily Market Snapshot 04 25 2012

Daily Market Snapshot

Bulls react to Apple's stellar earnings report.



Market Direction Model

A little green is a welcome sign after the preceeding dry spell. 

The Woody Indicator

(Volatility Indicator $VIX)



Volatility has been coming down the last couple days.
This is a good thing.



Trendline Analysis

Apple

Apple up around 9% today.
So Goes Apple - So Goes the Market.

It was a good day for sure. I would like to have seen even more strength today, but we will take what we can get. One day does not make a trend; it is a start however. I did begin adding positions today in most folios. Even if the correction continues, I believe it will not be too deep. The Euro debt problems eased somewhat today and the Fed Chairman's FMOC comments seemed innocuous.

Special Go-Getter Model Portfolio note:

New America Folio

The New America folio was helped a little today by a very nice 12%+ pop in GNC Holdings.

It does look like what we call a Climax Run. I will more than likely take profits tomorrow.

Up 12.26% today

This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.

Daily Market Snapshot 04 17 2012

Daily Market Snapshot

There is now a stand-off stalemate between
the bulls and the bears

Market Direction Model

Yesterday's upside action was strong enough to paint
our impulse indicator line mostly blue. We refer to these as
Kahunas, a bullish sign.

NASDAQ Chart View

Large moves represent institutional sponsorship and our
impulse indicators (Kahunas) confirm the strength of the move.

 
With yesterday's big up day, the bulls and bears are now on roughly equal footing, a stalemate situation, so to speak. The victor of this skirmish will serve as our sign post, whether it will be a continuation of the trend higher or a further move to the downside.
 
You can see from the above chart of the NASDAQ that our blue and red impulse indicators, at the bottom of the chart, provide useful insight as to the likely direction of the market going forward, blue bullish and red bearish. You can see that the occurance of blue Kahunas in the past has been a reliable indication that the market's least path of resistance was to the upside. The occurance of a red Kahuna is just the opposite. 
 
The left side component of our Market Direction Model provides red and blue impulse indicators for the nine major US Markets. This part of the MDM acts as an early warning system giving us a heads-up, alerting us about potential reversals in the market.
 
In the last week or so we have had alternating red and blue Kahunas (impulse indicators). This represents confusion on the part of investors and has resulted in a big slide in investor sentiment and a substanial increase in volatility.
 
This is all exacerbated by the fact that Apple now is owned by nearly all mutual funds, hedge fund managers and individual investors. Additionally, the money flows in and out of Apple exceed that of any other security. Consequently, Apple exerts an inordinate amount of influence on the markets and the NASDAQ in particular; hence, so goes Apple - so goes the market. Apple reports earnings on April 24th. I am sure their earning will be terrific; it will be their guidance that will be highly anticipated. Comments from the management will be finely parced and could potentially have a great impact on the market as a whole.
 
Until we get a clearer take on of the markets, my preference is to keep position sizes small and to limit losses when and if they occur.  I would rather not try to be a hero and gamble when the market is in a stalemate situation. My preference is to wait for more clarity and have the wind at my back when investing. Overall account stability and capital preservation are among of the primary goals of the Golden Years and In-Betweener Model Portfolios.
 
 
 

This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.

 
 
 

Daily Market Snapshot 04 16 2012

Slight Snapshot Improvement

Yesterday was an odd day  in the market. The NASDAQ sold off, while the DOW rose.

The NASDAQ is dominated by yesterday's big decliners, Apple and Priceline.com. The NASDAQ is now in an intermediate downtrend.

My expectation would have been for a decline in all markets with the decline of the major market leaders. Since that did not happen perhaps investors are merely rotating out of the former leadship and in to the market laggards, the old market main stays. Time will tell.

Slight MDM Improvement

Volatility remains high.

Volatility remains high

Trendline Analysis

Apple in downtrend

Priceline in downtrend

 

The NASDAQ is now in an intermediate downtrend.

 

 
 

Inflation Hedges Folio

Gold has been getting whipsawed and appears to
continue in a consolidation mode

 
 
As I write on Tuesday morning, the market is getting a bounce. If the markets do not bounce back in a significant way in the next few days we should expect the correction continue. Investor sentiment has definiely turned negative and money has been leaving the market. I reduced risk exposure. I exited GLD. I do have a couple small hedges in place. Additionally our Flexible Income folio is now positioned defensively.
 
The current market condition represents confusion.Without a certain degree of clarity we should expect the volatility to continue. Caution is called for.
 
 

This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.

Daily Market Snapshot 04 13 2012

Daily Market Snapshot       



Back to bad.

  
Concerns about a China slowdown and European Debt worries weighed on the markets according to the talking heads.
 
 
 
 
 
 

Market Direction Model     

 

Better than expected earning  reported by the JP Morgan fell on deaf ears as the stock market declines once again.
 
 
 
 
 
 
 
 
 

So Goes the Leading Stocks - So Goes the Market

 

When trying to gauge the health of the market it is a good practice to pay attention to how the market leaders are doing. Their strength or weakness can deliver possible clues about where the market goes next. Ian Woodward, market analyst and HGSI group mentor, refers to these leaders as canaries in a coal mine.

 

 

Canary in a Coal Mine

Apple Rolled over today.

 

The Woody Indicator

(Volatility Indicator $VIX)

Volatility Spikes again.

Failed Upside Breakout

Nice bounce - but failed to follow through.

In a side note in my previous blog, Paul R, HGSI forum member, warned of the possible pitfalls of buying the dip prematurely. Well today's action offers the perfect example. Getting whipsawed is detrimental to account values.

For the moment the market seems to be primarily focused on comments made by individual Fed governors concerning monitary policy and little else. With the high level of volatility, failed breakouts and canaries suffering I think it is best to maintain a high level of cash for the moment.

Blog Addendum 04 14 2012

Fred Richards, HGSI forum member and former Harvard Professor, provides our group with a weekly newsletter. Fred is a valuable resource to the HGSI group. I thought I would share his most recent newsletter (I received it after writing today's blog); the link is below.

A lot of the newsletter is pretty technical, but there are two sections I would like to draw your attention to:

1. Comments about the real rate of inflation as opposed to what the government reports. (I think we are already aware of this discrepency)

2. Comments about APPLE rolling over.

http://www.gerritzwealthmanagement.com/wp-content/uploads/2012/04/Musings041312.pdf

This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.

Daily Market Snapshot 04 11 2012

Daily Market Snapshot        

Slight improvement

The expected market bounce was unimpressive.

Market Direction Model       

MDM remains negative

The MDM shows nothing but red. Risk remains high.

(Click on the charts for easier viewing)

Trendline Analysis

Closing off the days highs on lower volume
suggests lack of conviction on the part of the Bulls.

Effective Volume Analysis

Smart Money Activity



The Smart Money Large Players
were not really participating in today's move.

 We are currently positioned to gain if the market remains in correction mode.  The above analysis shows that downside risk remains high. The market is reacting to an oversold condition; this is to be expected. Without a higher volume reversal to the upside the market remains vulnerable to a further move to the downside.

At the moment my bias remains negative. If the market proves me wrong I will change my stance. Unlike the talking heads in the media, I do not let my ego get in the way. The market will be my guide.

Side Note:

Being part of the HGSI forum has its benefits. I thought I would share a brief exerpt from an email note sent to me today by HGSI group member Paul Reiche:

Stephen,


Unless we see a dramatic improvement I'm in cash for awhile. Years past I would already be nibbling and would get slapped on a regular basis.

Paul R

This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.

Daily Market Snapshot 04 10 2012

Daily Market Snapshot

The Market Snapshot clearly
illustrates the carnage in the market today.

Market Direction Model

The entries for 04/10/2012 were all painted red.

Trendline Analysis

NASDAQ Composite Index

The Woody Indicator

 (Volatility Indicator $VIX)

Volatility spiked up strongly today.

 
The market was pushed over the edge today as volatility spiked and the leadership stocks finally broke. By the end of the day the market had given up a lot of ground; the market has now given up about 2 1/2 month's gains.
 
It is said that markets go up like stairs and down like elevators.


For the past two weeks, I have progressively raised cash in all Model Portfolios; today I moved to 100% cash in the accounts managed at Shareholders Service Group. Furthermore, I sold all current equity and flexible income positions held at FOLIOfn.

For FOLIOfn accounts, I took new positions in US Treasuries, German Bunds, Gold related ETFs and a small position in RWM, the Russell 2000 (small cap) inverse ETF.

The market is now oversold, so we should expect a bounce, perhaps tomorrow. If we do not get a significant bounce short term, this market will likely head further south.

I have no plans to buy this dip right away; that would be akin to trying to catch a falling knife The market has suffered severe damage; this correction needs to run it's course before it is safe to get back in.

I am inclined to sell short into any rallies. We will see.

Daily Market Snapshot 04 09 2012

Daily Market Snapshot

The market got a little uglier today.

Market Direction Model

Market in correction mode.

Lots of red in the income sector.
US Treasuries, the only sector painted green,
usually rise as equities correct.

To confirm a full blown correction, we still need to see volatility spike higher yet and for our canaries in the coal mine, Apple and Priceline.com, to start showing some weakness. Apple and Priceline we up today and volatility is still in the safe zone.

I did raise addition cash today.

This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.

Flexible Income Folio

Barton Bigs Sees 5% to 7% Market Correction Near Term

Renowned Hedge Fund Manager, Barton Bigs of Traxis Partners, discusses his reasons for being bearish at the moment in this Bloomberg video. I am in agreement with Barton.

Click on the link below to view.

http://www.gerritzwealthmanagement.com/barton-bigs-sees-5-to-7-sp-500-correction-near-term-bloomberg-video/

DANGER Will Robinson

In the old TV program, Lost in Space, the robot would cry “Danger Will Robinson”, warning young Will of possible trouble; I know I’m showing my age. Well, our indicators gave us such a warning on Tuesday.


The release of the minutes from the recent FOMC meeting indicated that the Fed has taken any further quantitative easing (QE-3) off the table. Market participants understand that QE has played a major role in driving asset price higher. The market’s reaction to this news was less than jubilant to say the least. Stocks, commodities and especially precious metals rapidly declined on heavier volume.

I did take evasive action, pairing back our positions once again. Technically, this rally has gotten long in the tooth.

 

Daily Market Snapshot

 

 

The Bears gained the upper hand on Tuesday.

Market Direction Model

Is the much anticipated correction at hand?

As I mentioned in the latest issue of The Gerritz Letter, we are due for a correction.  Is this the beginning?  I don't know; but I am willing to error on the side of safety.

This blog post does not constitute an offer of investment advice. This blog is only provided for educational purposes. Please read the Important Blog Disclosure posted in the right channel bar.