4/26/2017 Sector Trade

The Sector Model sold XLB and bought XLU before the close.

4/23/2017 A Stock that No One Seems to Want

Sector Model	XLB	0.08%
Full Model	Date	Return	Days
BT	8/11/2015	-41.79%	621
DY	10/30/2015	39.56%	541
TMK	11/23/2015	27.80%	517
NVR	12/16/2015	26.15%	494
CMP	2/19/2016	0.93%	429
NVR	2/22/2016	31.46%	426
ENOC	3/15/2016	-22.13%	404
AMWD	3/17/2016	27.87%	402
CASY	5/12/2016	-1.17%	346
AVB	5/24/2016	6.83%	334
AEM	6/7/2016	-7.86%	320
ESRX	6/13/2016	-12.45%	314
AMED	6/16/2016	4.47%	311
FRO	6/27/2016	-11.55%	300
ASTE	7/12/2016	5.39%	285
MFC	9/1/2016	27.57%	234
SFM	9/8/2016	15.55%	227
CFFN	9/12/2016	6.95%	223
FIG	12/6/2016	58.88%	138
PMC	3/16/2017	2.67%	38
(Since 5/31/2011)
S&P	Annualized	9.91%
Sector Model	Annualized	16.32%
Full Model	Annualized	13.02%
S&P	Total	74.60%
Sector Model	Total	143.85%
Full Model	Total	105.83%
Sector Model	Advantage	6.41%
Full Model	Advantage	3.11%
	Previous	2017
S&P	66.43%	4.91%
Sector Model	120.54%	10.57%
Full Model	91.27%	7.61%

The market news sites are talking about the Trump trade.  Has it fizzled?  Will it get a second life?  Should we be in the market or out of the market?

Since I’m always in, the question isn’t the Trump trade, but the Clontz trade.  What industries are in high supply and low demand?  In other words, what’s on a fire sale?

The stock I’m looking at right now is GNRC – Generac Holdings.  They make generators and do well when the weather is chaotic and oil prices are high… neither of which is true at the moment.  Oh yes, the march for science is saying that the weather will get destructive as a result of climate change, but it hasn’t been very destructive lately.

When do people buy generators?  Well, right after they experience a power outage.  A hurricane comes through and everyone who needed a generator two months ago will buy one now that they no longer need it.  That’s just human nature.

But this brings us to two different kinds of stocks: a quick trade or a longer term investment.  A trade is in high demand and shrinking supply.  More and more dollars are chasing fewer free shares.  An investment is just the opposite: fewer and fewer dollars are chasing stocks that no one wants to hold onto.

That’s GNRC.  No one seems to want it.

And that’s why I’m watching it.

Tim

4/16/2017 The New Abnormal Normal

Sector Model	XLB	-1.62%
Full Model	Date	Return	Days
BT	8/11/2015	-42.81%	614
DY	10/30/2015	26.10%	534
TMK	11/23/2015	24.70%	510
NVR	12/16/2015	27.70%	487
CMP	2/19/2016	2.36%	422
NVR	2/22/2016	33.08%	419
ENOC	3/15/2016	-23.50%	397
AMWD	3/17/2016	25.90%	395
CASY	5/12/2016	-1.56%	339
AVB	5/24/2016	6.70%	327
AEM	6/7/2016	-6.64%	313
ESRX	6/13/2016	-12.44%	307
AMED	6/16/2016	3.43%	304
FRO	6/27/2016	-11.28%	293
ASTE	7/12/2016	2.38%	278
MFC	9/1/2016	26.75%	227
SFM	9/8/2016	15.29%	220
CFFN	9/12/2016	3.55%	216
FIG	12/6/2016	58.68%	131
PMC	3/16/2017	2.45%	31
(Since 5/31/2011)
S&P	Annualized	9.79%
Sector Model	Annualized	16.03%
Full Model	Annualized	12.83%
S&P	Total	73.13%
Sector Model	Total	139.70%
Full Model	Total	103.34%
Sector Model	Advantage	6.25%
Full Model	Advantage	3.05%
	Previous	2017
S&P	66.43%	4.03%
Sector Model	120.54%	8.69%
Full Model	91.27%	6.31%

Immediately after the sale of UPL, the stock nearly doubled in price again.  Since the model adjusts the trading strategy based on how stocks perform even after a sale, the rotation process has been revised into a manner that would not have missed that opportunity.

I had been observing that potential change in the process, and the UPL miss was only the final verification – and a rather expensive one at that.

The short version of the story is that the median trade will increase to become more like the average trade – a hold of five and a half years.

In other news, the Sector Model remains firmly on the long term regression line – abnormally “normal”.  Something has to give. 

In Sector relationships, the market is both defensive and rising, the ultimate indecision.

     

Nothing to do at the moment but wait.

Tim