11/30/2014 A Bullish Choice

Sector Model	XLB	0.00%
Large Portfolio	Date	Return	Days
SR	6/2/2014	-17.89%	180
ESI	8/4/2014	-41.93%	117
STRA	8/18/2014	28.55%	103
KFY	9/29/2014	4.14%	61
IQNT	10/6/2014	49.63%	54
EDU	10/27/2014	-1.03%	33
PLT	11/6/2014	0.21%	23
BKE	11/10/2014	3.41%	19
CPSI	11/17/2014	-4.52%	12
GRMN	11/24/2014	0.40%	5
(Since 5/31/2011)
S&P	Annualized	13.07%
Sector Model	Annualized	25.96%
Large Portfolio	Annualized	22.92%

 

Rotation: selling IQNT; buying KLIC.

Note: in order to keep the annualized tracking correct I’m measuring the returns for GRMN from 11/24/2014 instead of 11/28/2014.  That basically negates the cash position I was forced into when AP gapped down below my buy limit order and still failed to hit.

The Sector Model switched to XLB before the close on Friday.  I made the change in my own account.  Steve’s STAR sector fund (which tracks my model) is still in XLF:

The sector ratios are showing a late bull configuration:

Keep in mind that the model is positioned a month ahead, so even when it shows a top the market can continue to spike.

The collapse in XLE is a setup for a potential buy point that could come during the next quarter.  Right now XLE is still in the “avoid” position for the model.  I don’t routinely mention the “avoid” position because I don’t want to confuse it with a “short” position.  The model does not time the market, and it therefore has no short positions.  The “avoid” position simply means that it is too volatile to be used by the model.  Sometimes I’ll have a stock that slips into that position and it skyrockets.  Sometimes I’ll watch a sector in that position have a devastating day like this past Friday.  Since the model cannot use the information, it avoids it rather than shorting it.

I should mention, though, that the market typically does quite well when XLB is the choice.  Basic Materials are much in demand when the economy heats up, and we typically have some positive surprises in the news during these times.  Let’s hope it can stay in XLB for a while.

Tim