09/27/2012 premarket (I'd buy this dip)

Small Portfolio	XLF & IAU	16.68%
Position	Date	Return	Days
DECK	6/15/2012	-24.51%	104
RIMM	7/16/2012	-3.45%	73
DVN	9/7/2012	1.36%	20
OKE	9/25/2012	-0.02%	2
SEAC	9/25/2012	-3.92%	2
CAJ	9/25/2012	-4.30%	2
DDAIF	9/25/2012	-5.40%	2
SSD	9/25/2012	-4.66%	2
AF	9/25/2012	-4.88%	2
AM	9/25/2012	13.27%	2
S&P	Annualized	4.93%
Small Portfolio	Annualized	12.56%
Large Portfolio	Annualized	15.70%

 

All of the position changes were successful the other day.  I’ll give a full trade history for the model this weekend.  This morning I want to take a quick look forward at the market.

Market breadth is lagging the indexes.  Small caps and fundamental selections (i.e. basically most of the stocks in my model) are likely to have difficulty for a while.

The market is losing momentum as well, but this is still an uptrend until it isn’t.  We’ve pulled back to short term support, but financials still have strong money-flow (hence XLF on the small portfolio).

On the full model the strongest industries are:

OILGAS

ENTTECH

ELECFGN

SHOE

BUILDING

AUTO

WIRELESS

THRIFT

PUBLISH

RAILROAD

 

And the weakest industries are:

B2B

BIOTECH

SEMICOND

SOFTWARE

FUNL SVC

DEFENSE

UTILEAST

DIVERSIF

PIPEMLP

DRUGSTOR

 

The weakness in DEFENSE is a reflection of cutbacks in preparation for the fiscal cliff.  While traders can speculate it will not occur, businesses cannot.  I’ve been noting the weakness in technology, and we have three technology industries lagging in money-flow: BIOTECH, SEMICOND, and SOFTWARE.  This is NOT a new bull market, nor even a young one.  But that’s stating the obvious.

What about the OLD bull market?  Is it dead?

I don’t think so.  Not yet.  I’ll confess to being a permabear on a gut level, but BUILDING, AUTO, and RAILROAD are not bearish industries.  What is missing here is AIRTRANS.  It’s been under pressure lately, and is only mid range on my model.  It’s neither a short nor a long, but should trend with the broad market until we have definitive guidance on the fiscal cliff in the US and the willingness of Spain to take a bail-out.

If I were timing (which I’m not, but if I were), I’d buy this dip.

Tim