SectorVue weekend comments for Tuesday August 2nd , 2011
Market Location and Horizon
The Market and our market indicators failed to find support last week as Congress played
with the debt limit ceiling hot potatoe. Our Market indicators Summary , page 1, fortold the
impending volatility three weeks ago giving us plenty of time to have 38% cash sitting on
the sidelines awaiting a buy signal. Prevailing Wind and Market Tide are testing the water
for a bottom as they did in mid June. The blanket fear based selling was enough to tilt our
longer term Diamond Jim indicator to a Sell signal Friday. Since then stocks have had
three 100 point swings and we are going into Tuesdays trading asking Whats next?
Current volatility is the reason we began to focus on stable dividend paying stocks on
January 1st and we continue to believe this will be the winning strategy for 2011 and
beyond.
Growth vs. Value (page 13) has continued to favor Growth which is the only peg for bulls
to hang their hats on. If we do get a sustainable bounce this week this indicator will lead
the market higher. Likewise if Growth faulters in favor of Value this week then the tremors
whipped up by Congress are likely to effect the economy and the markets for the months
ahead.
The Income GPS portfolio is up 5.65% in appreciation year to date plus a projected
dividend yield of 10.49%. Something tells me most investors will be pleased with a non-
volatilie 16% return this year. We have about 38% cash on hand and the bargains are
getting better every day. We expect to pick up a few stocks this week.
Email incomegps@unrulydog.com for a sample of our high dividend paying stocks.
Deal or No Deal
The Dow Jones finished the week down 537 points while the Nasdaq 100 NDX fell off
66 points. The Volatility index VIX spiked up 7 points or more than 50% in a week with
the anticipation and fear of what might happen with the debt limit ceiling. Now that its
passed the wrangling and discussion will be whether anything real has been
accomplished or if it is too little too late for a floundering economy.
Sector Action for last week was minus 1998 with all Sectors down . This sets the stage
for an oversold bounce this week. The Market Barometer is oversold and has not
stopped going down yet. (see graph on page 4)
Rydex Alerts- bullish RUT and half cash in this flip flop market looking to go into bullish
NDX.
Short term Trading indicators- Oversold
Market Breadth - Cumulative Market Breadth is bearish and sinking which is why we
have not bought any growth stocks over the last few weeks. (see graphs p 4)
INTERMEDIATE TERM TRENDs- Bullish
INTERMEDIATE OSCILLATOR - Oversold
Enough already. Politicians yes leaders NOT.
There are no headlines on stock market charts so you can point to historically oversold
conditions and be assured chicken little was sounding the alarms at all of these key
market lows and subsequent bounce. The overall trend is yet another matter as we have
said this market is in a trading range which means you must buy the lows and sell the
highs or invest in less volatile dividend paying stocks which mute the daily volatility.
Natural XNG- Top of the Sector ranks led by Chesapeake CHK and Noble NBL.
NiSource NI has a 4.5% dividend and is a buy here at $20.14
Technology TXX rising in rank and in the forefront of up and down reactionary
movements in the market. Apple AAPL and IBM are the leaders here. IBM Calls have
been a good play the last few weeks for news announcements.
Ultra ETF’s- Ultra SP500 ETFs SSO and Bearish and Bullish NDX QID and QLD are
trading vehicles with nice daily ranges.
Financials KCE, BKX, XBD- Financial Sectors have all risen in overall rank which is a
prerequisite for a market rally. This is the first time in over a year these sectors have been
attracting money and it is usually their own. We bought Goldman Sachs GS last week.
see graph of XBD on page 5
Healthcare IHI IHF- these sectors have fallen off in rank and price as healthcare costs
are under the budget cutting axe. Intuitive Surgical ISRG and Steris STE are bargain
buys.
Dividends DVY- We reiterated buys on AGNC with a 19% dividend, Verizon VZ and
Altria MO with 5% dividends.
SectorVue and Rydex alerts are for educational purposes only and do not constitute 'investment advice'.
No representation is made that strategies will produce a profit.
There is risk of loss in all trading.
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