Sunday, December 14, 2014

12/14/2014 In Confusion There is Profit


Sector Model
XLB
0.00%
Large Portfolio
Date
Return
Days
ESI
8/4/2014
-42.28%
132
KFY
9/29/2014
1.92%
76
EDU
10/27/2014
-5.91%
48
PLT
11/6/2014
-0.71%
38
UVV
12/2/2014
4.43%
12
FSLR
12/5/2014
-9.85%
9
JOY
12/8/2014
-9.93%
6
SWHC
12/9/2014
-0.31%
5
MRVL
12/10/2014
-3.80%
4
RS
12/11/2014
-4.53%
3
(Since 5/31/2011)
S&P
Annualized
11.89%
Sector Model
Annualized
24.24%
Large Portfolio
Annualized
20.73%

 

No rotation.

Please note: the XLB current return is actually about -4.5%, but I reset the model after all of the market action this week.  The listed “0%” is from the reset, but the annualized return of “24.24%” since 5/31/2011 is correct.

It’s been a hard week for both models.  Here is the sector model for the year:



Still above the benchmark, but that could change after another week like this last one.

Basic Materials hasn’t been hit as hard as energy stocks, and my FLSR and JOY positions have been soundly punished – down almost 10% apiece.

Nevertheless, the market typically does well whenever the sector model is in XLB.  In fact, the market typically does TWICE as well during an XLB call as it does during any other position.

Granted, this could be the exception, but cheap materials (and cheap energy, for that matter), drive down the costs of making things, which is good for earnings and good for the consumer as well.  We should start seeing some optimism returning in a few days.

As for those intraday rotations – the recent gyrations have been giving me some favorable gaps to trade.  If I see a favorable gap of 2% or better I’ll be open to a trade.  Right now the trading options I’m looking at are:

Sell
Buy
EDU
QCOM
KFY
INT

 

As Tony Curtis said in Operation Petticoat, “in confusion there is profit.”  In weeks of market terror, those gaps are a nice little gift J.

But I can’t post those kinds of gaps ahead of time.  I just have to peek in on a lunch break and take one if it happens.

Tim

 

 

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