GWM Flexible Income Folio - Buying while the Blood is on the Ground

The specter of higher interest rates has cause havoc in markets worldwide. Particularly hard hit has been the

bond market; but the real estate investment trusts (REITs) have even suffered more. I think that the move down in some of the REITs may be overdone and has created some opportunities for bottom fishing  in the GWM Flexible Income folio.






I took a small position in Realty Income Corp. (O). Here is my analysis:

The Stock is down nearly 20% from its 52 week high.

Realty Income Corp.

After a smooth as silk rise, the stock plunged
19% since its peak in May

Realty Income Corp.

My analysis

Click on the chart to view details

The stock found support at the 200 day moving average. It had a nice bounce on higher volume on Friday. With a 4.8 % yield at this juncture it make a nice bottom fishing buy for the Flex Income folio.

If you would like a more in-depth analysis click the link below.

http://seekingalpha.com/article/1501562-o-is-a-buy-not-a-bargain?source=yahoo

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. 

Follow Through Day on 06/13/2013 - Market Status Changes to "Market in Confirmed Uptrend"

Market Snapshot

Great one day improvement

Added more green

Follow Through Day on S&P 500 Index

The dual purple dots show up when we have a
Follow Through Day

Chart View

S&P 500

Nice reversal on the 13th

On 06/13/2013, Investor's Business Daily changed the status of the market to:

"Market in Confirmed Uptrend"

The market topped out on May 22nd. We had our first rally attempt on June 6th. After the first rally attempt we keep our powder dry  until we get a confirmation that the institutions are ready to sustain a new rally. This confirmation comes in the form of  a large daily advance on higher volume. We call this a Follow Through Day. It is our signal to begin adding positions.

"All successful rallies begin with a Follow Through Day, but now all Follow Through Days result in a successful rally."

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.

Japanese Stock Market Commentary - (Bloomberg Video)

Japan Stocks May Rise Another 20-30%

The Japanese market corrected more than 7% in just a couple days. We have exposure to Japan via the

Japan

Hedged Japan ETF, DXJ. DXJ is still one of our best performing position year to date. It is also one of our high conviction positions. My intent is to ride out the storm as of now.

All GWM Model Portfolios have a 5% position in DXJ. 

Click the link below to view a brief Bloomberg video discussing the outlook for the Japanese market.

http://www.gerritzwealthmanagement.com/japan-stocks-may-rise-another-20-30/

Federal Reserve QE Comments Spark Market Sell-Off

In a recent blog post, I indicated the overbought condition of the market. I have also said that  markets can remain over-bought for a long time. A catalyst is needed to trigger a correction. We got that catalyst yesterday when the Federal Reserve suggested that they may taper off their bond buying program (Qualitative Easing) as early as next month. This was a real surprise for the market.

Market Snapshot Transition

The sell off is accelerating.

Chart View

After reaching new all time high on Wednesday
the market suffered a major reversal on the Fed comments

The bond market has been trending down since July of last year. Yesterday it actually dropped more than stocks.

20 Year + US Treasury Bond Chart

QE has been the impetus for the market rise in the face of a less than desirable global economic backdrop. Now that there is uncertainty about the future of QE it is prudent to raise a little cash now and let the market settle out for a while.

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 and GWM Model Portfolio Performance for 05/17/2013

Market and GWM Model Portfolio Performance for 05/17/2013

(click on the charts for easier viewing)

Positions as of 05/17/2013
Beginning of the Day

Market Snapshot

The Market has gotten quite extended now.

Chart View
Weekly Price Bars

The S&P 500 Index
has breached it's upper Bollinger Band.
This is a classic sign that the market is getting
ahead of itself.

Market Direction Model

The Market has had a very nice run.

I took profits in QIHU for reasons stated in the my last blog post. I also decided to ring the bell on some other GWM Model positions today. A number of attractive stocks that have been on my watch list are just now breaking out. I intend to buy them next week if the market remains amenable.

The Market Snapshot above is telling us that the market is now getting overbought. Remember, green is good; but, too much green is bad. The market is very strong and we do want to participate in the move, but we should not get complacent. 

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.

Took profits on Qihoo 360 (QIHU)

I rang the bell on QIHU ahead of Monday's earnings report. We gained better than 9% in a very short time.

Ian Woodward, HGSI Group Mentor, says high growth stocks, such as QIHU, go up like rockets, but can drop like rocks. The GWM New America Folio is all about high growth stocks. In the New America folio we invest in stocks with the potential to be very big winners, but positions have to be carefully managed. Many times this means not holding the stock through their earnings reports, too dangerous with an IPO (new issue) stock.

QIHU reports earnings this coming Monday. If the street like what it hears, the stock will shoot up; if not, it will drop like a rock. Since we don't know what earnings will be, I prefer to take profits now. QIHU is not one of our high conviction stocks yet.

If the street likes the report, I will liked buy the stock back, even if at a higher price.

An old Wall Street saying:

"Bulls make money, Bears make money, and Pigs get slaughtered."

Words of Wisdom

Famous Quote About Money and Investing From the late Sir John Templeton,

Famed Founder of Templeton Funds.

“Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.” – Sir John Templeton

Many investors are skeptical about the current rally in stocks. If there is truth in Sir John Templeton's words of wisdom, then these skeptics will be proven wrong once again as they are left behind as the train leaves the station.

My style of investment management seeks to align our accounts with the prevailing trend of the market. If the trend is down, I'm defensive; if the trend is up, I'm in it to win it. 

We have not had a 5 or more percent correction in the last 180 days. We are certainly due for a correction, but, when the music is playing we have to dance. For now, we are fully invested in all GWM Model Portfolios. I deal with it a day at a time.