10/13/2013 Stock picking takes the lead

Sector Model	XLK	0.75%
Large Portfolio	Date	Return	Days
ABX	4/11/2013	-28.62%	184
TTM	5/6/2013	22.24%	159
BTI	7/1/2013	1.79%	103
VAR	8/2/2013	6.13%	71
QCOM	9/3/2013	1.92%	39
FLR	9/16/2013	8.59%	26
NEM	9/30/2013	-8.43%	12
BCR	10/4/2013	3.61%	8
BAX	10/7/2013	1.52%	5
BDX	10/11/2013	1.63%	1
(Since 5/31/2011)
S&P	Annualized	10.48%
Sector Model	Annualized	24.04%
Large Portfolio	Annualized	30.27%

 

Rotation: selling FLR; buying INT.

FLR is in the engineering and construction industry, while INT in the oil and gas industry.  This is a move away from economic development to inflationary expectations – i.e. a late bull.

Of particular interest is the model’s recent cluster in medical inventory: VAR, BCR, BAX, and BDX.  That’s a full 40% crammed into a single healthcare industry.  Ordinarily this would be bearish, but I’m unable to determine how the Affordable Care Act is affecting this industry, and so it is impossible to tell how it relates to the market as a whole.

As I’ve noted before, this is not a natural market.  We are caught between the threat of default and the promise of more helicopter drops of cash from Bernanke’s replacement – Janet Yellen (to be known in the future as “Yellicopter”). 

For the market as a whole, then, there is no signal; there is only noise.

This environment favors stock selection over market timing.

The best industries to look through are:

GOLDSILV

AUTO

UTILEAST

UTILWEST

TOBACCO

REIT

MEDICINV

NWSPAPER

FURNITUR

OILGAS

 

And the Mousetrap’s best ranked stock between fundamentals and technical placement is NEM (which I currently own).

There’s not much else to say as long as the insanity in D.C. continues.  And I’m not talking about the shutdown.  That’s a symptom of a far larger problem the electorate has called upon ourselves.

I have more to say, but not tonight.  Real life is calling…

Tim

 

PS For those not subscribed to the blog, please note the trade on Friday, which sold OUTR and bought BDX:

http://market-mousetrap.blogspot.com/2013/10/10112013-rotation.html