Saturday, July 28, 2012

Market Comment 07 27 2012

Market Snapshot

The Bulls regain control.

Market Snapshot
Chart View

The market has been very choppy with big up and down moves.
That being said, the market has put in a series of higher highs and higher lows.
(This is the definition of an uptrend.)

Market Direction Model
Two nice upside days puts us back in rally mode.
All of this could change next week with further news out of Europe, the Feds
comments on possible quatitative easing and the very impactful
jobs report on Friday.

While I haven't written a blog post for a couple weeks, I have been actively tweaking GWM Model Portfolios to stay on the right side of the market. We have been making steady gains and limiting volatility.

Even with the positive moves Thursday and Friday we still do not have a clear path to the upside going forward. The defensive sectors such as utilities and consumer staples are attracting money. A real rally would be led by industrials and commodities.

News driven markets are unpredictable; so caution is still called for.

The markets have been rising on speculation that the economy is weakening to the point that Bernanke will pull the trigger on a new round of quatitative easing, which would be our signal to load up on stocks aggressively. If  Bernanke makes no mention of forthcoming QE in his FMOC report on Wednesday and/or if we get a bad employment report on Friday, the market will quickly head south in a big way. Either way, events this coming week will be our guide.


Monday, July 9, 2012

GWM Model Folio Performance vs. The S&P 500

Our folios are holding up very well compared to the S&P 500. While the market has lost ground for the last two sessions, our model portfolios and their individual components made money.  Click on the table below to view the two day performance figures.

GWM Folio Performance
2 market days only
July 6th and July 9th

The Green shaded row represents all GWM Model portfolio holdings combined.
The Red shaded row represents the S&P 500 Index.
The Green shaded column represents each individual GWM Folio by name.
 * The performance figures are for illustrative purposes. The assets included and their actual weighting is unique to each GWM Model Porfolio.

Special Notice:

I have changed the name of a few of our folios.

The Discretionary Folio is now called the New Economy Folio.

The objectives of this folio are the same as before. Discretionary was merely a temporary name: I believe the New Economy moniker is a more descriptive banner.

The Long/Short 1x folio is now called the Major Markets folio.
The Long/Short 2x folio is now called the Major Markets II folio.

The current market environment is very choppy. Taking short positions as either a hedging strategy or a money making strategy is proving to be unproductive. These folios can still go long or short, but I will only employ this feature under what I consider to be the right conditions. The Major Markets folios will be focused on broad market ETFs, such as SPY, TLT, IWM, etc.

I will soon change the name and objectives of the Inflation Hedges folio as well.

Commodity or hard asset ETFs generally perform very well during inflationary periods. I think the larger concern for investors at the moment is the prospects for deflation; consequently, commodities have been in a severe bear market for some time now. These markets are in clear down-trends with periodic big rallies. The extreme volatility of this asset class has bear market written all over it. In my judgment I think it is best to invest this portion of the model portfolio in a less restrictive manner. I will give you an update later.

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.

Market Comment 07 06 2012

On Friday the market was down sharply. The market was over-bought and due for a pull-back. The current sell off is not alarming and has in fact relieved the over-bought condition of the market. The underlying tone actually remains positive, especially for the small cap stocks.

As I write on Monday morning, the market is down again, but not in a big way.

Market Snapshot
July 5th and July 6th

Market Direction Model

GWM Model Portfolio Holdings

Below is a back-test of the complete list of assets held in GWM model portfolios. Performance is based on an equal weight of all assets. So, this is just presented to give you a general idea of how our picks are performing.

The actual assets and weightings you may have are dependent upon your chosen GWM Model Portfolio. The back-test represents returns since the active market low set on June 4th, 2012 through Friday July 6th.

(Click on tables and charts for easier viewing.)

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

If you would like to view the details on any of the investments listed above, click on [Portfolio Holdings Lookup by Symbol] under the [Clients] tab on the GWM web-site. As you well know these holdings are subject to change given the current nature of the market.

As a side note, I have over-weighted Apple in all model portfolios. Apple is still operating as a bellweather and is currently performing quite well.

Weekly Chart

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.