Sunday, December 28, 2014

12/28/2014 The Fix is in


Sector Model
XLI
0.00%
Large Portfolio
Date
Return
Days
ESI
8/4/2014
-29.28%
145
EDU
10/27/2014
-9.66%
61
PLT
11/6/2014
3.25%
51
UVV
12/2/2014
6.60%
25
JOY
12/8/2014
-5.18%
19
SWHC
12/9/2014
2.91%
18
MRVL
12/10/2014
-2.58%
17
RS
12/11/2014
-0.10%
16
INT
12/15/2014
1.15%
12
BBRY
12/24/2014
1.02%
3
(Since 5/31/2011)
S&P
Annualized
13.10%
Sector Model
Annualized
25.76%
Large Portfolio
Annualized
21.79%

 

No hard rotation, but I do have a potential rotation that could occur if there is a large enough gap on Monday.

The Sector Model has been whipsawing like crazy all week, and I’ve had a hard time keeping up.  For what it’s worth, this is what it should be:



 

My own account is off by a fraction of a percent, and I’ll be hunting for a better data source to use actual real time data instead of delayed data.

In other news, I finally fixed an error that has been plaguing me for two years on the fundamental aspect of the full model.

I won’t go into the full details, but now that I’ve corrected the analysis, it appears that the following are technical and fundamental features of a good buy point for a stock.

First, of course, the stock has to be in an industry that is in the buy zone for my model.  That means that long term breadth and volume are doing better than price – for the industry as a whole.  Volatility is also spiking to show extreme panic.

WITHIN those parameters, a stock should have high average volume, low P/E relative to the rest of the stocks in that industry, with low long term debt, good earnings growth for the past year, good sales growth for the past 10 years – and bad prospects for the year ahead.  By bad, I mean bad: book value, sales, earnings; all projections are for a lousy year.

The key seems to be to find a stock that everyone hates, which isn’t in immediate danger of going bankrupt.  At the point of maximum stink, the stock should outperform.

The first buy of these corrected parameters is BBRY.

If “maximum stink” is a good description, then BBRY fits the bill.

Sharp eyes will note that earnings are negative for this stock, and that the earnings growth and low P/E didn’t play a role.  But it made the cut anyhow, so I’ll be watching its performance going forward.

Tim

 

 

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