Merry Christmas

The fantastic acapella group, Pentatonix, sing Little Drummer Boy.

There are no instruments; all the sounds you hear are made with their voices only.

Click the Link.

https://www.youtube.com/watch?v=qJ_MGWio-vc

Pentatonix

There is a little story behind these videos:

Two of Chris Gerritz's old PHI KAPPA PSI fraternity
brothers do many of the videos for the Pentatonix. Jimmy Bates and Reilly Zamber formed a company they call Fifgen Films. Jimmy Bates (Fif is his nick name because he is the fifth Jimmy in his family according to Chris)  wanted to make movies, but is meeting with a great deal of success working with Pentatonix, collaborating on YouTube videos. They get paid for views and ad clicks. Their video have had millions of clicks.


The following video was done in a dorm room on a $120 budget. The guys from the group went to second hand shops in Corvalis to buy their costumes. This video has had over 110,000,000 views.

https://www.youtube.com/watch?v=3MteSlpxCpo

Cybersecurity expert: 'Attackers have outpaced defenders'

Christopher Gerritz
Infocyte CEO

Chris Gerritz, GWM Advisor and CEO of the cybersecurity startup firm, Infocyte,  comments on the recent cyber-attack on Sony.

ABC News - San Antonio

Click the link below to view news clip.

http://www.ksat.com/content/pns/ksat/news/2014/12/17/cybersecurity-expert---attackers-have-outpaced-defenders-.html

Happy Thanksgiving

Have a Safe and Happy Thanksgiving!

From the Gerritz Family

Good Jobs Report Helps Market Regain its Footing

A good jobs report helped the market regain its footing today. 

You can see from the S&P 500 chart below, that recent market pull-backs have been limited to draw-downs in the 4 or 5% range.  I also want to point out that the 120 Day Moving Average line has acted as support in each decline. Will this time be the same?

Many sectors of the market have been hit very hard. The market indexes have masked much of the carnage going in various market sectors, i.e., the small cap stocks.  The Russell 2000 (small cap index) has declined about 11% from its recent highs, but more that 50% of the index stocks have declined more that 20%..

The US is clearly the best performing economy in the world. While Europe is close to another recession, the US continues to grow, all though at a slow rate.

Today's reversal has given me the confidence to begin increasing our equity and bond exposure.

(Click on Chart for Easier Viewing)  

S&P 500

If history repeats itself, the rally will now resume. 

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.

Is a short term bottom in the Market at Hand?

The market behaved rather well today. All the recent rally attempts had  failed until today. The market went up and held its gains into the close. This is an encouraging sign. Below is a chart showing Dow Jones Industrial Average and its 200 Day Moving Average.  Notice how the 200 DMA acted as support during the last two declines.Will that be the case once again?

Dow Jones Industrial Average Index

Orange Line = 200 Day Moving Average

The DJIA is now close to break even on the year.

Dow Jones Industrial Average Index

If the market activity remains positive on Monday, I will redeploy some cash into the market. 

The recent market decline has only been in the 4 - 5% range on the Dow and the S&P 500, The small caps stocks as well as many S&P sectors have been hit much much harder.

Given the number of disconcerting global events making headlines daily, I believe we should expect more market volatility. The upside will probably be capped for the next month or so. But, I think buying a little on the dips (at possible support levels) makes more sense than buying a breakout to new highs. 

The European Central Bank Cuts Rates to Bolster Flagging Economy

Today Mario Draghi, ECB President, took dramatic steps to kick-start the European economy, include cutting rates to below zero on bank funds placed with the European central bank. I think this is a first. What this will do is provide the banks with an incentive to loan more money to businesses, stimulating the economy and mitigating the prospects of a dangerous deflationary environment.

Because the US is part of the global economy and the European economy is actually larger than ours, this move by the ECB is a big plus for markets worldwide.

The markets, which have been lackluster so far this year, sprang to life with the Dow Jones Industrial Average up around 100 points as I write. Additionally, David Tepper, a very well known and widely respected hedge fund manager, stated that ECB's move serves as a green light for stocks going forward.

Market Bounce

After the Nasdaq Composite Index hit it's 200 Day Moving Average, representing a 10% decline and a valid
market correction, the market bounced nicely. While this bounce may last a couple days, it is not confirmation that the short term down-trend is over.

(Click on Chart for Easier Viewing)

Nasdaq Composite Index

Has a Nasdaq botton been put in at the 200 DMA?
We won't know until until there is evidence of a trend change.

I will probably add to our position in energy, which has been outperforming lately.

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.

The Nasdaq Composite Now Down about 8% - This is the Average for a Pull-Back

The Nasdaq composite, which is home to many of the high flying growth stocks, was down about 8% from it's recent highs this morning before bouncing back a bit.  The average market pullback is historically about 8%. If this level does not hold, we will probably see this pull back turn into an 8 to 12% correction.


GWM Model Portfolios currently are invested in a very defensive manner. Accounts have a very high cash position and the invested positions are primarily in the defensive Consumer Staples and the Utilities sector.

The market remains very volatile with 100+ point up days followed by 100+ point down days. Gil Morales, a  well known investment manager, says the market is acting like a chicken with it's head cut off, just running all over the place with no rhyme or reason. In the current environment it is very easy to get chopped up trying to pick a bottom; that would be a fool's game.

The market index averages are concealing a lot of carnage going on under the surface. Many individual growth stocks are down 20, 30 and 40%. While this is creating opportunity, the time to buy is not yet at hand.

Gold is Up and the Stock Market is Under Pressure

World headlines concerning the Russian's involvement in Crimea and negative economic news out of China are being blamed for the stock market weakness.

It is always a guessing game as to a specific reason for stocks coming under pressure. I happen think the market is still consolidating last years gains, gains that were really fueled by excess liquidity in the market as a result of  unprecedented money printing by central banks all around the world.

The primary trend remains to the upside, however, we cannot ignore the downward pressure on stocks at the moment. Consequently, I will be reducing market exposure in the GWM Major Markets 2 Folio and GWM Sector Rotation Folio 2.

I will be adding to our gold related positions in both Sector Rotation folios because gold is now breaking out to the upside.

Year to Date Returns

The Market has recovered from it's January pull-back..  The S&P 500 Index is now up 0.96% Year-to-Date.

S&P 500 (Benchmark) Y-T-D:   +0.96%

GWM Golden Year: Y-T-D:       +1.67%

GWM In Betweener Y-T-D:      +1.73%

GWM Go Getter Y-T-D:           +1.85%

S&P 500 Index

S&P 500 up 0.96% Y-T-D

The market is having a little trouble breaking through its recent highs at this juncture.  We may chop around for a while as world events unfold in the Ukraine. For the moment, my optimism has been dampened a bit because of Putin's latest military moves.


Addendum: Performance broken down by Folios

GWM Folio Performance Y-T-D

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.

All 2013 Tax Docs Have Been Delivered

All 2013 tax docs have been delivered to you and/or your tax preparers. Tax Docs were delivered via Dropbox, email or regular mail as appropriate. Forms include 1099s, 1099Rs and Form 8949. Realized Gain/Loss reports have been also sent when requested.

If you are missing any docs please call or email me.

Stephen L Gerritz, CFP

PowerShares MENA Frontier Countris Prt (PMNA) is being closed out by PowerShares

PowerShares MENA Frontier Countris Prt (PMNA) is being closed out by PowerShares. I hate to see this great investment being  discontinued. You can see by the chart below that they are closing out at their all-time high.

PMNA represents 10% of the GWM Marjor Markets folios 1 and 2. Share are being liquidated at $13.61 per share and cash will be returned to accounts in a few days. Overall account valuations posted at Folio currently list PMNA at 0 value while the shares are being tendered. Cash proceeds will be deposited back to your accounts on Tuesday the 25th. At that time your accounts will show their true and correct overall valuations.

PowerShares MENA Frontier Countris Prt 

(PMNA)

PMNA being liquidated at all time high, $13.61 per share.

Invesco PowerShares: Leading the Intelligent ETF Revolution

Invesco PowerShares is leading the Intelligent ETF Revolution through its family of more than 120 domestic and international exchange-traded funds (ETFs). PowerShares ETFs seek to outperform traditional benchmark indexes while providing advisors and investors access to an innovative array of focused investment opportunities.

Follow-Through-Day Registered on the NASDAQ Index, Indicating a Probable End of the Correction

After a 7.46% decline in the Dow Jones Industrial Average, the correction may have run it's course. When one of the major market indexes reveals evidence that large institutions are once again buying stocks in volume, odds favor a resumption of the uptrend.

Our Follow Through Day (F-T-D) indicator marks an initial rally day (the blue dot in the chart below) following a market low (the green dot). The market must hold above this rally day level going forward (the grey dots) for 4 to 10 days or more. We then look for a Follow-Through-Day, (2 magenta dots), as confirmation that the new rally may be sustainable. The F-T-D is  characterized as another big up day on greater volume than the previous day.

This is more info than you probably wanted to know. Suffice it to say, it is now safer to go back in the water. 

Next week I will be adding back positions in earnest. The most attractive investments will be those that held up best during the correction; The strongest candidates are revealed in market down-turns.

(Click on Chart for Easier Viewing)

Follow-Through-Day Indicator

Market in Confirmed Uptrend

* With corrections of 8% or less, the market normally recovers rather quickly.

* From a historical perspective, when markets correct more than 8%,  there is no telling how much further they could decline, i.e., July to October 2011. This is the precise reason that risk management is an important part of our portfolio management style.

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.

The Mena Frontier Countries Powershares ETF (PMNA) added to the GWM Major Markets Folio

I added a new position in the GWM Major Markets Folio:

The Mena Frontier Countries Powershares ETF (PMNA)

Many emerging markets have suffered steep declines, mainly due to the QE taper talk. The reduction of quantitative easing in the US is negatively affecting  currency valuations in many of the emerging market (EM) countries. On the other hand, frontier markets, a sub-sector of the EM category, have managed to remain rather unaffected by the turmoil in the broader emerging markets space.

The frontier markets include many Middle Eastern and Northern African countries. Because these frontier market countries have much smaller economies they peg their currencies to the US Dollar; this is a stabilizing factor. Further, their markets are in the early stages of economic development. Moreover, they have relatively lower valuations as well as higher income yield. 

The Mena Frontier Countries Powershares ETF (PMNA) has a very nice looking chart, with prices moving from lower left to upper right, I refer to these nice chart patterns as LLURs.

The Mena Frontier Countries Powershares ETF

 (PMNA)

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 in Correction

The S&P 500 is down 5.7 year to date. The Utilities Sector is the only sector showing positive returns.


Looks like we are now getting the correction I expected.

All GWM Model Portfolios continue to hold very high levels of cash.

(Click on Chart for Easier Viewing)


Sector Performance Y-T-D

Chart by Global Macro Monitor

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.

2013 Folio Tax Release Schedule

The Following Folio Institutional 2013 Tax Docs will be available as follows:


Approximate Posting Dates

By January 31st: Form 1099-R (Reports IRA distributions) 

By February 28th: Consolidated Form 1099s for taxable accounts 

I will place these documents in Dropbox folders for you and your tax preparers shortly after they are made available.

Steve

Added Yelp (YELP) to the Core Equities Folio

We bought Yelp once again. It broke out after consolidating since early October of last year.

Yelp is like the new online version of the old Yellow Pages book.

(Click on Chart for Easier Viewing)


YELP

I could have bought it yesterday, but I wanted to see how the market
would react to today's employment report first.

This morning's employment report was very bad, very few new jobs created. While the Dow was down a little, the market overall was positive. When the market rises on bad news it is a good sign of market strength.

GWM Folio Performance Today.

The Core Equities folio invests in individual stocks.

Core Equities Folio

YELP (YELP) = Internet Services
Facebook (FB) = Social Media
Gilead (GILD) = Large Biotech
Valeant( VRX) = Pharmacueticals
Las Vegas Sands (LVS) = Leisure and Entertainment
Celgene = (CELG) = Large Biotech
Citi Group (C) = Money Center Banking

The Major Markets and Sector Rotation folios invest in ETFs, which are baskets of stocks targeting various markets and industry sectors.

Major Markets Folio

VGK = European Stocks
MDY= Mid-Cap Stocks
HEDJ = Currency Hedged European Stocks
RPG = S&P 500 Growth Stocks
RPV = S&P 500 Value Stocks
DIA - Dow Jones Industrial Index
DXJ = Hedged Japanese Market Stocks

Sector Rotation Folio

ITB = Home Builders
TAN = Solar Power
PBW = Alternative Energy
XLF = Financials

The Biotech and Solar stocks are working in this market. The Home Builder are making a come back. Financials also showed strength earlier in the week.

While the markets have had a poor start to new year, there are definite areas of strength within the market. While choppy, the intermediate trend remains to the upside. 

Many high growth stocks are emerging from long periods of consolidation that began in the last half of last year. For the most part, the stocks we are invested in are breaking out to the upside and holding their gains.

Funny Money

The Federal Reserve has begun to taper off their quantitative easing program. Last year they purchased $85,000,000,000 of securities every month. I, for one, will be happy when the government stops goosing the market. Last year, every time the market attempted to correct, to rid itself of excesses, the Fed kept the spigot on, flooding the market with money. Both the GWM Market Direction Model and Investor's Business Daily's Market Direction Model were rendered completely ineffective in the face of unprecedented money printing going on here and abroad. While these models have worked well for many years, I now have to ignore their signals until they become effective once again.

(Click on Chart for Easier Viewing)

Investor's Business Daily

ETF Market Direction Model

The IBD ETF Market Strategy
has demonstrated superior performance,
beating the S&P 500 by more that 2 to 1
since the year 2003.

While these market direction models delivered great results, with a fraction of the volatility experienced the last 13 years, the above chart clearly shows these same models under-performed the market in last two years. I believe this is the result of the Federal Reserve propping up the market with funny money (QE).

The market has not had a meaningful correction for two years; one is coming but I just don't know when. For now, I plan to stay fairly fully invested and ride the trend higher.

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.

Facebook (FB) Showing Strength Again

After breaking out, Facebook (FB) retested it's breakout line. Stocks often move back down momentarily after their initial breakout. It is now moving higher once again and looks like it is ready to run.

(Click on Chart for Easier Viewing)

Facebook

Facebook looks poised to move higher.

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.

Valeant Pharmaceuticals (VRX), A Core Equities Folio Position Up Big Today

Valeant Pharmaceuticals (VRX) gains 11.3% today on good news.

VRX had been consolidating since October of last year. We bought a position last week when it hit our buy point. VRX represented a 20% position in the Core Equities Folio.

Valeant Pharma

Up 11.3% Today

After a weak start to 2014, the market rebounded 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.