10/7/2012 selling DVN; buying NSC

Small Portfolio	XLF & IAU	20.24%
Position	Date	Return	Days
DECK	6/15/2012	-25.05%	113
RIMM	7/16/2012	13.38%	82
DVN	9/7/2012	3.11%	29
OKE	9/25/2012	3.30%	11
SEAC	9/25/2012	1.84%	11
CAJ	9/25/2012	-8.55%	11
DDAIF	9/25/2012	-3.06%	11
SSD	9/25/2012	-1.54%	11
AF	9/25/2012	-2.39%	11
AM	9/25/2012	13.86%	11
S&P	Annualized	6.36%
Small Portfolio	Annualized	14.96%
Large Portfolio	Annualized	18.01%

 

Scheduled rotation on Monday: selling DVN and buying NSC.

DVN is in the GASDIVRS industry, and NSC is in the RAILROAD industry.  Although much has been made in the press about transports getting slammed, the weakness in that sector is specific to the AIRTRANS industry, while the more conventional RAILROAD industry has slipped into the gap.

The order I am entering for this trade will be an automated conditional order – my first experiment with this little device.  I’ll set the rotation to occur if, and only if, DVN is at or above Friday’s closing price and NSC is at or below Friday’s closing price.  They will have to both be true for the trade to happen.

In the broader market, there continues to be weakness, and the Australian dollar is plunging in a bizarre parallel to what www.marketanthropology.com has been predicting for months now.  I don’t understand what that blogger is doing and can’t comment on it, but it’s always fascinating to watch!

So what does that mean?  Maybe nothing; maybe deflation – which would explain the coordinated Japan, Europe, and U.S. quantitative easing efforts.  The general market is weakening, but the most defensive sectors (XLP, XLU, XLV) are even weaker still.  I noted last week that the BUILDING industry is strong, and the FURNITUR industry is strengthening as well.

Just looking at the inter-market relationships, I’d say we are still in a place where a nimble investor can buy dips.  But I would put emphasis on the word “nimble”.

I’ll be offline Monday, so I’ll set it and forget it and see what happens.  If nothing happens Monday or Tuesday, I’ll revisit the trade.  Until then…

Have a great Columbus Day!

Tim