Wednesday, July 2, 2014

WHERE NEXT? (SECTOR ROTATION MODEL CHECKUP)





SECTORS & CYCLES
I've advocated for some time that some of the best ways to deploy capital is to pay attention to where you are in the economic environment (expansion/contraction) and weigh where you think you are in the market cycle (bull/bear).  the Market Sector Model highlights areas that tend to do well during those corresponding periods or phases in the cycle.  Frankly, this approach has been pretty successful over the course of many years of investing.  I like this approach, and it keeps me constantly evaluating my positions and where we are heading.





The question becomes, where are we now.  Personally, I feel as though we are right new the middle of the graphic which would suggest that we've gone through a raging bull market, scaled the walls of worry furiously, and reached IPO nirvana which to me signals a market top.  Bonds have been acting weird and energy stocks have been bought with a vengeance.

THE DETAILS -
(Graphics below from marketscalpel.com)

I found this neat little summary that I didn't ever see before which simply restates the original model above.  In a way, I like this graphic even better as it is cleaner, but doesn't overlay the market (bull/bear) phases though.

This version that draws out sectors in energy, healthcare and consumer goods should be performing well and this seems to correspond pretty well with what we've seen in actual trading in the last 5 to 6 months.



I find that this graphic is even cooler as you can drill down into very specific details of each category.  Here's a breakdown of the Consumer Goods, Healthcare, and Energy.


Consumer Goods - Food & Beverage & Tobacco
Healthcare - Medical Equipment & Supplies and Pharmaceuticals
Energy - Oil & Gas and Coal

Coal has been destroyed in the last year or so due to our Presidential war on coal.  As crazy as it may seem, it may be time to consider coal plays like Peabody (BTU).  It is an ugly chart, but the upside reward might be worth a smallish play.




IS THE PARTY OVER?
No, I don't think we are through and on to the next phase of Utilities and Telecoms, but that doesn't mean that you don't look at them and you don't start preparing.  In fact, we've commented that utilities have simply been the best performer for the year.  Other market participants may be front running this or simply assume that we are indeed farther along in the cycle than I do.

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at http://www.goatmug.com/

Tuesday, July 1, 2014

WORLD CUP OF CHARTS


The US tries to keep hope alive, very much like this market.  Utilities, munis, corporate bonds, and treasuries have all been big winners so far through 6 months.  The SP500 is up around 5% and the Dow is up around 2%.  All in all, not much has happened, but a slow grind higher in the midst of a world ripping itself apart due to our leadership deficit in so many places.  Its a good thing the US soccer team has a great coach and so do we as Janet Yellen stands at the helm, guiding us ever so gently in a ZIRP environment.

Here's just a few charts I look at daily.  Near the end I've highlights stocks I've watched, bought, missed, or feel like there may be opportunities in soon.

XLU - Why not utilities?  Utilities must be signaling that rising interest rates are pretty much a myth and will never happen.



XLU:SPY


IMPORTANT CHARTS
APA - Energy Sector has had an awesome run, is this starting to tire?


ARCP - Looks constructive now.


COP  - Overbought?  Each of those recent peaks in RSI have resulted in short term pullbacks.  Traders may want to exit and buy again on any weakness


EWY - Emerging Markets finally coming back?


FB - A run into earnings.... exit a day or two before they announce?


FCX - Who knows what the cost of production is/was for gold and silver, but as gold hit $1250, the destruction of gold, silver, metals, and miners suddenly stopped.  FCX has had a nice run since hitting $30 with a unexplained pop today taking it above $37.


IXN - This etf has been a long-time powerful winner.  Short term looks a bit overbought.



JBLU - Finally breaking out.  Look at the RSI at the top showing overbought.




JOY
There is some risk here of a reversal and fall to mid 50's.




KMI - Nice run.  Is there still momentum to move higher?



KRE - US Regional banks are certainly nicer than European banks.  It looks like there is room to go 5% higher at least.


SLW - Momentum is here.  The 14 Week MA crossed over the 40 Week.  This is a significant longer term signal suggesting continued upward pricing.


VTR - We need a bounce here.  VTR is extremely tied to longer term bond yields.  The 4% dividend yield is nice.



OTHER ITEMS - FOR CONSIDERATION

AAPL - APPLE - Probably goes to $100.  Probably should wait on this one as risk/reward set up isn't great.



 DUK -DUKE ENERGY - Utilities are all the rage.  A possible breakout as the higher-highs and higher lows just keep coming.




GDXJ - JUNIOR GOLD MINERS
Will the evil gold cartels and traders allow gold to continue to rise?  COT report shows large increase in commercial shorts, probably doesn't bode well for gold, unless some geo-political shock comes to light.... we haven't had any of those lately have we?






GILD - GILEAD - Hard to buy here, but this should be a strong earnings report and the rebound has been impressive.



GMT - GATX CORP - Railcar leasing seems simple enough.  



GOOGL - GOOGLE - Same risk / reward trade off as AAPL, however I think GOOGL is better than AAPL.




INTC - INTEL - Strong breakout.  INTC seems to have its swagger back.  Any pullback can be bought.



HAL - HALIBURTON - Energy anyone?  Too late to buy here.







MSFT - MICROSOFT - Remember when we could have bought at $26 on its way to $30.  I think this is a hold and not a buy. 



OXY - OCCIDENTAL PETROLEUM - Wait for a pullback and confirm price action.  This has run a long, long way.





O - REALTY INCOME - The leader in long-term triple net leases.  I like the action here and has a nice dividend.



PPLT - PHYSICAL PLATINUM - Very nice.



SCCO - SOUTHERN COPPER - Nice chart, would have like to buy on the bounce.  Is housing going to slow?


Stocks have run quite a bit.  I like Realty Income, Gilead, and GATX Corp, and possible AAPL with an eye toward earnings.  Otherwise, energy has been unstopple, it just seems hard to buy now.



GOATMUG
Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at http://www.goatmug.com/

Wednesday, February 19, 2014

WHAT COMES NEXT? (BID & MACRO VIEW)


Without any commentary..... what do you think comes next?





GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at http://www.goatmug.com/

Wednesday, February 12, 2014

THINKING OF BITCOIN? THE DEVIL'S CURRENCY

Just in case you were thinking about buying some bitcoins, perhaps it is the father of lies and temptation who is the source of your wandering thoughts.....



Bitcoin seems to be under attack from governments, hackers, and the corporate-types as Apple un-approved the bitcoin app this week as well.  Could AAPL or GOOG be ready to enter with their own crypto-currency like a Googlecoin?  We all know that corporations and government are tied pretty closely, could a special request have come from .gov to shut down apple user access to bitcoin?  We probably won't know, but it hasn't been a good week for bitcoin as it suffered a flash crash.  I hadn't owned any, but on the crash, I picked up my first .5 BTC just for grins.  I'm still in the money but the screen shot of the Bitstamp Exchange is a little scary.

FYI, Obamacare's enrollment is about to come to an end (unless the deadline is changed) and I'll be back to posting with regularity.  Sorry for the absence, just can't handle the volume and maintain the posts.

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at http://www.goatmug.com/

Sunday, September 8, 2013

CHART-NADO (SECTOR MODEL RECAP)


Several key things have been in play for months and I believe they will continue to be the leaders in this environment.  We'll update a few familiar charts, but also make sure to highlight the themes that will be the beneficiaries of the same sector rotation model we've based our analysis on for several years.

Let's dive in.



In my estimation we are now in the left middle 1/3 of this graph in that we have witnessed this crazy 4 year rally in stock markets, but just to throw a wrinkle at you, we have kind of limped along in the economic recovery marked with massive repression of interest rates causing some delayed impact within the normal rotation.

My thought is still that Technology, Industrials, Basic Industry, and even Energy are the key winners now and in the short to medium term.  However because of distortions related to interest rates, finance too will benefit from net interest margin spread growth, and they should continue to benefit.  (I'll hedge my bets here and suggest that regional banks and insurance companies will win, while large money center banks may lose as they are heavily dependent on mortgage activity for some of the success.)

I'll just post the charts with little comment.

COP


KMF




XLE




 MRK





PFE



IXN



SOCL



PNC



FITB



XLF



FCX



CAT



XLI



EWC



EEM:SPX



EEM


Emerging markets seemed to have bottomed relative to the SPX and may be the area to watch in terms of "better than" performance.  


SUMMARY
We've had a correction and despite all of the crazy geo-political issues, there are simply strong looking charts and reasons to watch for a good bounce.  Technology, Financials (especially regionals), Industrials, and yes, even cyclicals and emerging markets are the place to invest.  Many of the charts are at support so further weakness would take a prudent investor out of their positions.  This is a good time to re-evaluate all positions, commit to firm stops, or widen them out if you are willing to handle a bit more volatility to ensure you maintain positions.

WILD CARDS AND GEOPOLITICS
The wild card in the context of investing right now is determining a winning strategy in the midst of amateur hour at the White House.  The President is way over his head in the foreign policy arena and his adversaries (foreign and domestic political and national rivals) are circling like sharks.  His mis-steps related to Syria are serious and his weakness here has emboldened challenges from Assad, Iran, Russia, and China.  The correct thing to do for the President now is to simply state we don't know who used chemical weapons and then suggest that we'll wait for more evidence.  Meanwhile he should continue to arm and support the terrorist rebels and engage Assad to the point in which they begin to win.  At that time, our strategy should be to withdraw arms and support till they are weakened.  This approach assures no winner arises and continues to draw the evil black eyes of Iran, China, and Russia to this little spot of dirt in the Middle East. 

Our President must learn that there is no winning in winning and there is no losing if you support and are friends with the meanest and worst strong man as long as he wins and you are committed to giving him indefinite monetary support forever (where are you Mubarak, Obama didn't mean it!).  We've had our Utopian experiments by both Bushes and President Obama.  Clearly the people in this region do not have the same value system and cannot appreciate the same type of democratic approach our country actually used a long time ago.  In addition, we cannot pick winners and losers in the region as most of the time the new guy is a lot worse than the old guy.  

My point here is simply that Obama probably won't take my sage advice and I'm sure his arrogance will be more of a guide in his approach to use a "sterile" volley of tomahawk missiles to soothe his wounded pride.  An attack will result in increased oil and gas prices, refiner losses, gold and silver gains, and an uncontrollable situation.  Keep an eye on it!

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at http://www.goatmug.com/