SectorVue weekend comments for Monday March 21st, 2011
March Madness
The market heeded the Sell signals early in the week week and the expected oversold
bounce to finish. Japan and Libyan headlines pushed the buy and sell buttons and will
this coming week as well. Our Diamond Jim indicator is still on a Sell Signal and in a
down trend. The previous Sell signal came on August 11th and the market fell 4.25% in
five weeks. The Income GPS portfolio is up 2.11% in appreciation plus an average
dividend of 9.79% as we finish up the first quarter of 2011. Our objective is to keep our
principal safe and perhaps growing a bit as we collect hefty dividends keeping
one eye on the weather vane to protect against market squalls. Despite a bit of March
madness over the last few weeks diversification has allowed the Income GPS portfolio to
take advantage of the Sector rotation and smooth out the bumps. In addition last weeks
dip allowed us to pick up some good stocks on sale and increase our average dividend
return. Several of our holdings have announced increased dividends and earnings
already this year. (see p 5 and 6) We are also adding another stock with 14% dividends to
our bench list this week. (page 11) This is how the total return tortoise beats the high
growth hare in portfolio returns while minimizing portfolio volatility. The Prevailing Wind
indicator is headed South which means more stocks are going down than up which
means seek safety or ‘risk off’. The Growth vs Value ratio (p12) heavily favors Value
which is particularly good for dividend paying stocks. This week will determine if the
bounce can make it to the next bracket level or if the Bulls will be sitting on the sidelines.
Email incomegps@unrulydog.com for a sample of our high dividend paying stocks.
The Dow Jones finished the week down 185 points while the Nasdaq 100 NDX fell off
78 points. Volatility VIX spiked up as the market fell and uncertainty increased.
Sector Action for last week wasplus 1259 with 3 Sectors up and 32 down . The news
headlines allowed the bears to growl until reaching oversold levels Thursday. The
Market Barometer is in Bearish territory but oversold. (see graph on page 4)
Rydex Alerts- Sold bullish Russell Friday on the bounce now in cash.
Short term Trading indicators- oversold buy
Market Breadth - Cumulative Market Breadth broke the up trend found a bounce and is trying to
regain bullish territory.
(see top right graph p 4)
INTERMEDIATE TERM TRENDS- Bearish
INTERMEDIATE OSCILLATOR - overbought Sell
As our indicators forewarned the market finally sold off last week finding some support for
an oversold bounce on Friday. We have been taking profits on stocks over the last month
and we are looking for bargains on dips now.
Natural Gas XNG - Shot to the top of the Sector rankings led by Southwestern Energy
SWN and EOG Resources EOG. This is my pick for replacing nuclear energy.
Solar TAN-Also moved into the top ranks. Seems a bit overdone in this case as solar
energy is still more hope than reality.
Gold XAU -Rising in rank which has been the key to stock price movement over the last
year. Goldcorp GG has been the leader.
Ultra ETF’s- Ultra SP500 ETFs SSO and SDS are trading vehicles once again with
nice daily ranges. Ultra Utility UPW. Financial FAS and Semiconductor USD are
buys.
Technology TXX- fell into the lower ranks with Apple AAPL and Google GOOG falling
off sharply. These were the momentum leaders on the way up so they took it on the chin
when they hit the Sell button.
Utilities UTY- last in overall rank Exelons EXC threatening nuclear exposure. Might be a
good time to pick up Duke DUK and Dominion Resources D at good prices with hefty
dividends.
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No representation is made that strategies will produce a profit.
There is risk of loss in all trading.
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