12/14/2014 In Confusion There is Profit

Sector Model	XLB	0.00%
Large Portfolio	Date	Return	Days
ESI	8/4/2014	-42.28%	132
KFY	9/29/2014	1.92%	76
EDU	10/27/2014	-5.91%	48
PLT	11/6/2014	-0.71%	38
UVV	12/2/2014	4.43%	12
FSLR	12/5/2014	-9.85%	9
JOY	12/8/2014	-9.93%	6
SWHC	12/9/2014	-0.31%	5
MRVL	12/10/2014	-3.80%	4
RS	12/11/2014	-4.53%	3
(Since 5/31/2011)
S&P	Annualized	11.89%
Sector Model	Annualized	24.24%
Large Portfolio	Annualized	20.73%

 

No rotation.

Please note: the XLB current return is actually about -4.5%, but I reset the model after all of the market action this week.  The listed “0%” is from the reset, but the annualized return of “24.24%” since 5/31/2011 is correct.

It’s been a hard week for both models.  Here is the sector model for the year:

Still above the benchmark, but that could change after another week like this last one.

Basic Materials hasn’t been hit as hard as energy stocks, and my FLSR and JOY positions have been soundly punished – down almost 10% apiece.

Nevertheless, the market typically does well whenever the sector model is in XLB.  In fact, the market typically does TWICE as well during an XLB call as it does during any other position.

Granted, this could be the exception, but cheap materials (and cheap energy, for that matter), drive down the costs of making things, which is good for earnings and good for the consumer as well.  We should start seeing some optimism returning in a few days.

As for those intraday rotations – the recent gyrations have been giving me some favorable gaps to trade.  If I see a favorable gap of 2% or better I’ll be open to a trade.  Right now the trading options I’m looking at are:

Sell	Buy
EDU	QCOM
KFY	INT

 

As Tony Curtis said in Operation Petticoat, “in confusion there is profit.”  In weeks of market terror, those gaps are a nice little gift J.

But I can’t post those kinds of gaps ahead of time.  I just have to peek in on a lunch break and take one if it happens.

Tim