Tuesday, June 30, 2015

Sunday, June 28, 2015

6/28/2015 What to do when you're wrong


Sector Model
XLE
-5.93%
Full Model
Date
Return
Days
PWR
3/9/2015
4.84%
111
CBI
4/2/2015
10.09%
87
MTZ
4/9/2015
6.52%
80
NE
5/7/2015
-12.41%
52
DRQ
5/15/2015
0.22%
44
RES
5/19/2015
-4.42%
40
SPN
5/28/2015
-9.45%
31
ARLP
6/10/2015
-13.58%
18
PKX
6/17/2015
0.94%
11
NOV
6/23/2015
0.51%
5
(Since 5/31/2011)
S&P
Annualized
11.57%
Sector Model
Annualized
18.51%
Full Model
Annualized
18.11%
S&P
Total
56.23%
Sector Model
Total
99.85%
Full Model
Total
97.11%
Sector Model
Advantage
6.95%
Full Model
Advantage
6.55%
Previous
2015
S&P
53.06%
2.07%
Sector Model
122.60%
-10.22%
Full Model
101.13%
-2.00%

 

Both models had a hard week, with the market continuing to skate along on fumes.

Sector configuration continues to resemble a market top:





 

As I mentioned before, since my models look ahead, a market top is NOT a time to jump and run, but a time to look for some euphoria.

I could use some euphoria right now.

The short and long view of the Sector Model show the current angst in perspective.  First the short view:



 

And now the long (15 year) view:



 

The important point of comparison is the trend lines.  In the short view we are substantially below the trend line, and in the long view we are slightly above.

Although it feels abnormal at the moment, it would be entirely normal for us to fall a bit more and break the long term trend that hasn’t been touched since 2013.

What’s important to keep in mind is that no year will be exactly average. Some years will be above and some below. The key is to know what your long term strategy is and how you are performing against it.

Define your strategy ahead of time. Measure it. Keep it in mind. And you won’t get caught up in the euphoria or the panic. You will inevitably face both.

Tim

 

 

Tuesday, June 23, 2015

Wednesday, June 17, 2015

Monday, June 15, 2015

Sunday, June 14, 2015

6/14/2015 Mr. Market's Drug Dealer is in hiding


Sector Model
XLU
-3.35%
Full Model
Date
Return
Days
JOY
12/8/2014
-23.65%
188
PWR
3/9/2015
4.98%
97
CBI
4/2/2015
11.22%
73
MTZ
4/9/2015
-0.16%
66
NE
5/7/2015
-6.66%
38
DRQ
5/15/2015
0.27%
30
RES
5/19/2015
2.83%
26
SPN
5/28/2015
-1.91%
17
NUS
6/8/2015
-1.10%
6
ARLP
6/10/2015
-6.27%
4
(Since 5/31/2011)
S&P
Annualized
11.58%
Sector Model
Annualized
18.93%
Full Model
Annualized
18.81%
S&P
Total
55.67%
Sector Model
Total
101.43%
Full Model
Total
100.60%
Sector Model
Advantage
7.35%
Full Model
Advantage
7.23%
Previous
2015
S&P
53.06%
1.71%
Sector Model
122.60%
-9.51%
Full Model
101.13%
-0.27%

 

The Sector Model continues its short term weakness:



Long term, it has almost fallen to its trend-line:



All of this looks rather normal on a chart, but it doesn’t help that feeling in your gut when it’s real money.

And, being human, I’ve spent the past few weeks experimenting with different models, only to confirm that this is the best I can do. When weakness comes, it’s best to experiment offline so that you don’t mess up your real strategy.

Even the full model is stalled.

And for that matter, the entire market is stalled.

Breadth and volume remain slack while the market coasts on fumes.

The industries are slightly bearish now:

HOTELGAM
Bear
INSLIFE
Bear
POWER
Bear
TELESERV
Bear
THRIFT
Bear
TOBACCO
Bear
CHEMDIV
Bull
ELECTRNX
Bull
ENGCON
Bull
ENTTECH
Bull
HEAVYTRK
Bull

 

Mr. Market has taken out a life insurance policy because he realizes that his smoking and gambling problem can’t be good for his health. He’s even taken out a loan to cover his habit, and he lives by his internet connection so that he can stream the latest movies and games and whatever gadget is the latest one to make him forget his worries.

But eventually he has to get back into his Tractor Trailer and haul his latest load of construction equipment to the next hoped for boom town.

But the old boom towns have dried up. The oil wells are abandoned. There is too much power and not enough real business to use it.

Mr. Market is depressed. He could use a fix, but the liquidity dealing Fed has gone into hiding.

Tim