|
Style Model
|
Large Value
|
||
|
Sector Model
|
XLU
|
-2.50%
|
|
|
Large Portfolio
|
Date
|
Return
|
Days
|
|
ABX
|
4/11/2013
|
-31.20%
|
408
|
|
NEM
|
9/30/2013
|
-15.13%
|
236
|
|
BX
|
4/14/2014
|
4.56%
|
40
|
|
TIVO
|
4/23/2014
|
0.99%
|
31
|
|
SHOO
|
4/28/2014
|
-8.38%
|
26
|
|
UNF
|
5/2/2014
|
3.54%
|
22
|
|
CERN
|
5/8/2014
|
7.33%
|
16
|
|
PWR
|
5/12/2014
|
-1.04%
|
12
|
|
JRN
|
5/19/2014
|
0.99%
|
5
|
|
BT
|
5/21/2014
|
0.66%
|
3
|
|
(Since 5/31/2011)
|
|||
|
S&P
|
Annualized
|
12.29%
|
|
|
Sector Model
|
Annualized
|
25.62%
|
|
|
Large Portfolio
|
Annualized
|
25.48%
|
Rotation: selling CERN; buying PM.
The models remain defensive:
|
Large Value
|
Small Value
|
Mid Value
|
Mid Blend
|
Small Growth
|
Small Blend
|
Large Growth
|
Large Blend
|
Mid Growth
|
|
|
Utilities
|
1
|
2
|
3
|
4
|
7
|
18
|
20
|
28
|
68
|
|
Finance
|
5
|
8
|
9
|
12
|
14
|
33
|
36
|
47
|
74
|
|
Staples
|
6
|
10
|
11
|
13
|
16
|
40
|
43
|
50
|
75
|
|
Materials
|
15
|
19
|
21
|
25
|
31
|
54
|
56
|
59
|
76
|
|
Industrial
|
17
|
23
|
24
|
30
|
34
|
57
|
58
|
62
|
77
|
|
Healthcare
|
22
|
29
|
32
|
38
|
44
|
60
|
61
|
67
|
78
|
|
Technology
|
26
|
35
|
41
|
45
|
51
|
63
|
65
|
70
|
79
|
|
Cyclicals
|
27
|
37
|
42
|
46
|
52
|
64
|
66
|
71
|
80
|
|
Energy
|
39
|
48
|
49
|
53
|
55
|
69
|
72
|
73
|
81
|
And that has only strengthened in spite of the relatively
poor performance this past week in the Sector Model:
Keep in mind that the models measure price against breadth
and volume. If price falls relative to breadth and volume, it only
strengthens the signal. These are not
momentum based models, but mean-reversion models. They target beaten down stocks, rather than
surf on the popular ones.
PM, for instance, is resting 2 standard deviations below the
trend it has established from the beginning of 2009. The company is planning to buy back some
stock, it has good cash flow, and it is paying a reasonable dividend of 4.34%. Although
it is not scheduled to sky-rocket this year, it shouldn’t plummet either. And with the defensive nature of the internal
market structure, that’s exactly the type of stock we should look for.
In spite of the fact that the market indexes have been
rising to all-time highs, small growth stocks are getting hammered: http://scharts.co/1miGBFb
Tom Dorsey might call this kind of event a “Stealth
Correction.”
The bullish percent index on Stockcharts is showing mild
caution, since it has fallen below 70%: http://scharts.co/1miHLkc
These are cautionary indicators, and explain some of the
bearishness we see in the news lately.
Does that mean the market will go down?
If it does, I doubt it will by much. Remember, QE is still in play. The taper is not a reversal. The Fed hasn’t hit the brakes yet; it has
merely pulled back on the accelerator.
People who short the market are still in more “danger” than folks who
just hold forever.
At some point we’ll have a full blown correction, but trying
to time that point during QE has made
a lot of people poorer.
Best just to look for large value stocks in defensive
sectors and ride out whatever comes.
And that’s exactly what I plan to do.
Tim
