SectorVue Comments, by David Schultz
SectorVue Comments, by David Schultz
Sep 13 2011, 04:01 PM
Joined: 20-August 03
From: Cincinnati, OH
Member No.: 1
SectorVue weekend comments for Monday August 29th , 2011
Market Location and Horizon
The Market firmed last week as Prevailing Wind turned bullish and Market Tide rose into bullish territory. The
longer term Diamond Jim market timing is basing and will be the last to confirm a longer term bullish trend.
Last week finished on a positive note despite Hurricane Irene headed for NYC and possibly interrupting the
opening of trading floors Monday. Our recent purchases are working well and investors are beginning to feel
more comfortable getting back in the water. Bernanke said ‘all the right things’ at the Jackson Hole meeting
Friday and extended QE3 decision time until September when the FOMC meets again and Congress returns.
The Growth vs. Value Ratio (page 13) found support before dipping into Value territory and growth traders
perked up at the end of the week.
The Income GPS portfolio is up 3.23% in appreciation and received dividends year to date with a projected
dividend yield of 10.49% with just over 12% in cash. This is in line with our stated intent for the GPS portfolio
and we are very pleased with our indicators cueing us to take some profits and raise cash before the big wind
blew in. We continue to collect our quarterly dividends despite the volatile market environment giving us
staying power and allowing us to ignore the morning headlines and business channel pundits.
Our steadfast objective is to keep our principal safe and even growing a bit as we collect hefty dividends
keeping one eye on the weather vane to protect against market squalls and keep portfolio volatility low. We
have plenty of dry powder and plenty of quality stocks on our Bench list to consider picking up at bargain prices
over the next few weeks.
Sector and Market Review--
The Dow Jones finished the week up 466 points while the Nasdaq 100 NDX rallied 123
points. The Volatility index VIX topped out signaling investors are getting comfortable
getting back in the water.
Sector Action for last week was plus 1334 with all Sectors up . This means institutional
money is coming back into the market. The Market Barometer bottomed out on August
5th and has made higher lows since then even as the market dipped to similar or lower
price levels creating a positive divergence in this longer term indicator. (see graph on
Rydex Alerts- bullish RUT after riding out some very volatile days.
Short term Trading indicators- Bullish
Market Breadth - Cumulative Market Breadth turned positive last week and this has been
the most accurate indicator over the last year. (see graphs p 4)
INTERMEDIATE TERM TRENDs- Bearish
INTERMEDIATE OSCILLATOR - Oversold Buy
The Bulls were able to get a foothold last week and the button pushers will get
behind any move up or down 100 Dow points so expect some more 200 point days
in the coming weeks.
Gold XAU- Top of the Sector ranks although we have pointed out the negative
divergence between mining stocks and gold itself. At the least expect more volatility but it
looks very toppy from our point of view for the stocks and the metal.
Technology TXX Bottomed out last week as Apple AAPL rebounded from Steve Jobs
stepping down and IBM continues to be a leader on the big up days.
Ultra ETF’s- Ultra Bullish SP500 ETFs SSO and Bullish NDX QLD are trading
vehicles with nice daily ranges and a good way to play catch up if you were not
brave or lucky enough to buy at the bottom.
Financials KCE, BKX, XBD- Financial Sectors found some support after Buffets deal
with Bank of America BAC.
Healthcare IHI IHF- these sectors are value and growth plays at this point. Intuitive
Surgical ISRG and Steris STE are bargain buys.
Dividends DVY- We reiterated buys on AGNC with a 19% dividend and have a few
other choice picks in our income portfolio. Lincoln Financial LINC has a hefty
dividend and was oversold going into the weekend with hurricane Irene in the mix.
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No representation is made that strategies will produce a profit.
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