Alpha For the Independent Thinker

Closing Comments - 2011

2012-01-08T07:21:00.000-08:00

For most investors Friday, December 30, 2011, saw the major market indexes wrap up a disappointing year on an appropriately lackluster note, with stocks settling modestly lower on the final trading day of 2011.

However, for those following the traditional AAS Model portfolio’s modest gain are to be reported with the AAS Equity Model up 1.4% for the year and both the ETF Model and the Mutual Fund Model up 1.10% for the year. It might be worth mentioning that the later two models were effectively closed a mid-year.

Those who adapted to the writings which were laced into the both the AAS Newsletter and the Alpha for the Independent Thinker blog site might have done considerably better, as we have.

Early in 2011 we introduced the AAS Active Traders portfolio which holds only thirteen equity positions and trades weekly if needed. This portfolio was up 6.72% for the year versus 0.00% for the S & P 500 Index.

Next we introduced the AAS Commodities Portfolio which holds up to six specific ETF’s and will trade daily on technical changes if needed. This portfolio gained 12.75% for the year versus 0.00% for the S & P 500 Index.

Lastly, we wrote from time to time about the benefits for some of Day Trading Options and while the strategy is not for everyone it can be employed by focused and technically oriented investors to generate portfolio income.

Last year I used all three strategies in personal accounts and find myself engaged, challenged and extremely blessed come the close of 2011. For the year the weighted return of the three buckets of capital was 35.63% as compared to 0.00% for the S & P 500 Index and sharply negative returns for the vast majority of mutual funds and virtually every category of Hedge Fund worthy of investing in. The only harbingers of profitability in the Hedge Fund universe appear to be in the high risk arbitrage sector along with the dark emerging markets.

This is the last issue of the Alpha Advisor Service – AAS Daily Newsletter. It has been our honor and pleasure to be of service to you. We extend to each of you our wishes for a Happy, Prosperous and Safe New Year. Remain cautious, measure twice -- cut once and always remember that they are armed and dangerous.

Click on the image below to enlarge the view.

We can surface the Great Investment Ideas, but you have to pick them!!

2011-11-16T06:47:00.001-08:00

The abbreviated table below lists just the top five selections we surfaced recently for your continued research and investigation. While admittedly not a perfect system it does allow you to focus your time and efforts on picking the Best from the Best.

Note the selection dates in Column I, “Most Recent Buy Date”, this is the latest date when the security was listed as a Recommended Buy by the Alpha Advisor Service newsletter. Click on any of the inserts below to view an enlarged image.

Then take a look at the charts below when the price line on top or the histograms below turn Green the Alpha Advisor Service Buy Recommendation is in place. Timely, accurate and profitable.

Headwaters Inc. (HW)

Headwaters Incorporated (Headwaters) provides products, technologies and services in the building products, construction materials and energy industries. The Company generates revenue by selling building products, such as manufactured architectural stone, siding accessory products and concrete blocks; managing and marketing coal combustion products (CCPs), which are used as a replacement for portland cement in concrete; and reclaiming waste coal. It operates in three segments: light building products, heavy construction materials and energy technology.

Woodward, Inc. (WWD)

Woodward, Inc., formerly Woodward Governor Company, is a designer, manufacturer and service provider of energy control and optimization solutions. The Company designs, produces and services components and integrated systems that manage and control the energy of fluid movement, motion, combustion and electricity. The Company designs, produces and services energy control products. The Company has production and assembly facilities in the United States, Europe and Asia. The Company focuses on original equipment manufacturers (OEMs) and equipment packagers. It also provides aftermarket repair, replacement and other service support for its installed products. Its customers include OEMs and end users of their products.

Myers Industries, Inc. (MYE)

Myers Industries, Inc. (Myers Industries) manufactures a range of polymer products for industrial, agricultural, automotive, commercial and consumer markets. It manufactures plastic reusable material handling containers and pallets and produces plastic horticultural pots, trays and flower planters. Other product lines include plastic storage and organization containers, plastic original equipment manufacturer parts, rubber tire repair products and custom plastic and rubber products. It is also the wholesale distributor of tools, equipment and supplies for the tire, wheel and under vehicle service industry in the United States. The distribution products range from tire balancers and alignment systems to valve caps, tire repair tools and other consumable service supplies. As of March 7, 2011, it operated 16 manufacturing facilities and 39 distribution branches located throughout North, Central and South America. On July 21, 2010, it acquired the assets of Enviro-Fill, Inc.

ViroPharma Inc. (VPHM)

ViroPharma Incorporated (ViroPharma) is a global biotechnology company focused on the development and commercialization of products that address diseases, with a focus on products used by physician specialists or in hospital settings. The Company markets and sells Cinryze in the United States for routine prophylaxis against angioedema attacks in adolescent and adult patients with hereditary angioedema (HAE). Cinryze is a C1 esterase inhibitor therapy for routine prophylaxis against HAE, also known as C1 inhibitor (C1-INH) deficiency, a genetic disorder. It also markets and sells Vancocin HCl capsules, the oral capsule formulation of vancomycin hydrochloride, in the United States and its territories. On May 28, 2010, ViroPharma acquired Auralis Limited, a specialty pharmaceutical company. In March 2010, the Company’s Marketing Authorization Application (MAA) for Cinryze for acute treatment and prophylaxis against HAE was accepted by the European Medicines Agency (EMA).

Cambrex Corp. (CBM)

Cambrex Corporation (Cambrex) is a life sciences company that provides products and services for the development and commercialization of new and generic therapeutics. The Company primarily supplies its products and services worldwide to pharmaceutical companies and generic drug companies. Its business includes primarily the development and manufacture of pharmaceutical ingredients derived from organic chemistry. Cambrex’s products include active pharmaceutical ingredients (APIs) and pharmaceutical intermediates. Services include custom development and current Good Manufacturing Practices (cGMP) manufacturing services. In November 2010, the Company acquired a 51% interest in Zenara Pharma, an India-based pharmaceutical company focused on the formulation of final dosage form products. In March 2010, the Company completed the acquisition of IEP GmbH (IEP), a company in Wiesbaden, Germany, which is engaged in the field of industrial biocatalysis.

Please direct inquires and questions to Info@Alpha-Advisor.com

Health Spring Inc.

2011-10-25T05:25:00.001-07:00

We moved Health Spring Inc to a Buy on October 7, 2011 based on our stock selection process. Nice trade see below.

To enlarge the image below click on the image.

Intuitive Surgical Tops Views (ISRG)

2011-10-20T07:35:00.000-07:00

If you missed our report on ISRG in the October 14 Daily Traders Report catch yesterday's article in the IBD. Intuitive Surgical Tops Views As Robot Sales Climb by Amy Reeves.

Over the years our signal has favored ISRG, albeit sporadic over the past two years. On October 14, 2011 the AAS model again regained Buy recommendation this once for this producer of medical robotics.

To view an enlarged version click on the charts below.

Below the Daily and Monthly charts set up the periods when we favored this security for your consideration.

ISRG – Daily

ISRG – Monthly

This is not a solicitation or recommendation to buy or sell securities. Alpha Advisor Service LLC is not a broker, dealer or investment advisor. It is a newsletter service providing timely information for the investor to employ in their personal management of their investment accounts. This is a sample of the typical information which is available to you with a monthly subscription to the Alpha Advisor Daily Traders Report.

If you have any questions please direct them to the info@Alpha-Advisor.com

Investors full of unrest and fear- The Why!

2011-10-20T05:34:00.000-07:00

Consumer Food Index up 12.6% year over year, Regular Gasolhttp://www.blogger.com/img/blank.gifine at the pump up 23.5% year over year and the U.S. Misery Index at it’s 28 year highest. The Tea Party and Occupy Wall Street makes sense. U.S "Misery Index' Rises to Highest since 1983

To enlarge charts click on the image.

Trading like a Hedge Fund Manager without the expense.

2011-10-09T14:37:00.001-07:00

On October 6th we wrote most recently on how investors should be and could be taking defensive actions to both protect their portfolio’s and enhance their yearly returns. We spoke specifically on the value of the AAS Major Market Model signals.

Today, using the approach that a picture is worth a thousand words we are going to attempt to lay out the simplicity and effectiveness of using the AAS Major Market signal and the AAS Daily Trading report to grow your portfolio in both up and down markets.

To do this we have selected two trading cycles, a Long position was taken using the 9/3/10 Long Signal and held until the next subsequent Sell signal of 3/10/11. A short position was taken using the 7/29/11 Sell Signal and held until this past Friday October 7, 2011. Note that there was not buy or Long signal generated on October 7, 2011 and this date has been chosen only for the purpose of this example

In the first picture below you will see when the AAS Major Market Mode generated a Long signal on September 3, 2010. Since the model is run after the close of business each day it would not have been possible to trade this signal until the next trading day which was September 7, 2010. We ran the AAS Daily Trading report as of September 7, 2010 and identified the top ten names based upon the Buy recommendation and the highest AAS Momentum Score. Those names are shown in the second picture below.

Here on the blog you can click on the picture to enlarge it or to open it on another tab to enhance readability.

A similar process was used when AAS Major Market Model generated a Short Signal on July 29, 2011.

We stepped forward one day ran, the AAS Daily Traders report on August 1, 2011, and identified the top ten names based upon the Sell Recommendation and the lowest AAS Momentum Score. Both the signal data along with the names identified in the process are detailed in the two pictures below.

A model portfolio was then assembled using the closing prices on both the Buy and Sell dates on the Long side and the Sell and Buy to Cover dates on the Short side.

Commission expense has been calculated using the T. D. Ameritrade rates which are currently in place at $9.99 per trade. We have not attempted to calculate and the margin expense associated with the Short trade but recognize that there would be an additional expense should this have been a real time example.

This is not an exact representation recognizing that trade time, brokerage relationships and individual trading preferences would significantly alter any of the variable data used in these examples.

This is not a recommendation or a solicitation for the sale of neither securities nor advisory services. It is simply an attempt to stimulate interest on your part to take a more active role in your personal financial future.

As with all of the AAS Models the S & P 500 Index was used as the benchmark for comparison purposes. The S & P 500 gained 5.83% between September 7, 2010 and October 7, 2011. The trading in this manner along with the signals used here and with the names which we have identified could have enabled you to out perform the index almost 10 times after expenses, trading like a hedge fund manager without the overhead.

Please forward any questions which you may have or requests for further information to info@Alpha-Advisor.com. You may also request to be added to our email list if you so desire by sending your request to info@Alpha-Advisor.com as well.

Investor taking Defensive Actions

2011-10-06T06:52:00.000-07:00

In the recent USA Today article “Many investors quit stocks: Is it a buy signal?” John Wagner makes many good points. It is an informative article and well worth reading, the theme that comes through loud and clear is that investors are leaving the markets after suffering large losses and investment professionals are without a defense.

Subscribers to the Alpha Advisor Service bi-weekly newsletter could have and should have avoided this phenomenon with a little effort and work on their part.

You ask how, by simply following the AAS Major Market Model and the AAS recommended Asset Allocation levels you or your clients could have – should have been in cash prior to the major melt down in October 2008 as well as the declines of the third quarter of this year.

Our model generated a Sell or Short signal on September 17, 2008 advising our subscribers to take defensive action to avoid losses.

Most recently the model signaled a similar action on July 29. 2011.

There is no precise manner to determine how much you or your clients might have benefited by acting on our guidance, but subsequent to the September 17th sell signal the market as measured by the S & P 500 Index plummeted -21.89% before we advised reentry. The current signal has benefited subscribers by avoiding the -14.98% decline in the S & P 500 index since July 29th.

Is the monthly subscription price of $49.99 reasonable in comparison to the capital losses which you or your clients incur, we think so.

To subscribe send an email to info@Alpha-Advisor.com requesting a subscription in your name or the name of your firm. You will be billed through PayPal for your first monthly subscription and then monthly there after. Cancellation is automatic with the non- payment of the invoice, no refunds provided.

If you have any questions please forward to info@Alpha-Advisor.com.

Was your Long – Short Model up 10% last week versus the S & P 500 which was down -6.47%?

2011-09-25T10:35:00.000-07:00

If not - why not? We have been discussing the advantages of using the Top Ten page of the bi-weekly Alpha Advisor newsletter for the past several weeks. Each edition includes the Top Ten page which list the most current ten top ranked Long and Short ideas we have generated.

In the edition released last Saturday, September 17, 2011 we highlighted two specific names Netflix Inc. and Alexion Pharmaceuticals, Inc for attention.

Today, we are focusing on a portfolio modeling approach which many subscribers have told us works well in their portfolios.

An equal dollar weighted portfolio can be created using both the Top Ten Long ideas and the Top Ten Short ideas together. Than each week they trade out the holdings which drop off of the list and replace them with the most recently added names. Simple, clean and cost effective assuming you are trading on a cost effective platform such as T. D. Ameritrade of other low cost on line brokerage names.

Had an investor paid attention to the suggestions in last weeks letter a gain for the week of approximately 10% might have been achieved rather than the worst ever decline since October, 2008 which most of you experienced, again.

The following example is a very simple approach but works nicely, many use their own strategies with these names with similar success.

To enlarge click on image.

The newsletter subscription is currently priced at $49.99 monthly for the bi-weekly Alpha Advisor Service, not a large investment for the service and performance provided.

If you have any questions or would like to subscribe please email to info@Alpha-Advisor.com for a prompt response.

Alpha Advisor Daily Traders Mid-September Report

2011-09-18T11:22:00.000-07:00

Earlier this month we introduced the Alpha Advisor Daily Traders service. For those interested in new ideas with short term trading potential plus close correlation to market direction.

Given the volatile performance of the markets over the first eleven trading days thus far this month a peak at the services performance is warranted.

The Standard and Poor’s 500 Index is used as the benchmark for all of our services and the same is true here with the Alpha Advisor Daily Traders service. The index declined through the first nine days of the month bottoming on September 9th and moving upward over the next seven calendar days ending 1216.00 Friday, September 16th, just about flat with where it opened the month at 1219.12.

The service tracked the market direction almost to the day. The Sell side was most active early in the month with sell recommendations peaking on September 9th. And following the markets lead the Buy side picked up activity on September 7th then taking a slight breather over the historical weekend of the 11th, picking back up on the 13th to rise in volumes over the past week.

An explanation of the review process and a few definitions for the table below before continuing might be appropriate here.

We ran the analytical process after the close of business on September 16th just as it is done each trading day. The output was sorted by date producing the data in the column titled either Most Recent Buy Date or Most Recent Sell Date.

We then went back to each date and counted the number of new entries for that date which is set forth in the column Total Number.

Data for each date was then analyzed to determine the number of names remaining from those originally surfaced.

Then a Rate of Change analysis was performed to determine is the remaining names had risen or fallen. Closing prices have been used in all cases of this analysis.

A Winner on the Buy Side would occur if the Closing Price on September 16th was higher than the Closing Price of the name on the day of the most Recent Buy date.

A Winner on the Sell Side would occur if the Closing Price on September 16th was lower than the Closing Price of the name on the day of the most Recent Sell date.

Example of interpretation would read like the following:

On September 1, 2001, two (2) new buy recommendations were generated of which two (2) remain. Of the two (2) remaining names both have appreciated in price over the holding period ending September 16, 2011.

Or

On September 1, 2011 twenty (20) new sell recommendations were generated of which five (5) remain. Of the five (5) remaining names all five have declined in price over the holding period ending September 16, 2011.

A copy of the full spreadsheet is available for those interested, please email info@Alpha-Advisor.com with your request for a copy or any questions which you may have on the service or process.

Active Traders seeking new ideas!

2011-09-06T06:12:00.001-07:00

If you are an active trader seeking fresh ideas to help you add significant gains to your portfolio, this new service may be just what you have been looking for.

It is my pleasure to announce a new service to compliment our traditional bi-weekly Alpha Advisor newsletter. This is not to be confused with our newsletter analytic approach. This report has been designed to aid you in identifying short term opportunities to make money by either going long or shorting a cadre of high quality securities with both the volume and availability necessary to enter and exit quickly with attractive volatility.

The Alpha Advisor Daily Traders Report will be delivered each weekday morning by 8:30 AM Eastern Standard Time (EST) on all days which the U. S. Markets are open. It will be emailed to your personal email address using the same process as currently being used to distribute our newsletter.

Clicking on the embedded link in the body of the email will automatically download the most recent report to each subscriber with a paid-in-full account.

The report will cover a list of 200 securities that are Optionable and historically have higher daily trading volumes.

The Alpha Advisor analytical tools will highlight current Buy or Sell ideas and assign a Ranking Score.

For those seeking Buy or Long ideas, screening those names with the highest Ranking Score and the most recent Buy date will produce a list of candidates. Conversely, for those seeking Sell or Shortening ideas, screening those names with the lowest Ranking Score and the most recent Sell Date will produce a list of candidates for consideration.

To test the Alpha Advisor process for validity and profitability, simply pull up a daily price chart of one of the securities which you see as attractive and calculate for yourself the potential profitability it affords those with trading prowess.

Here are two complimentary examples of both a Buy and a Sell chart from the attached list which you can use to test this approach.

The monthly subscription price of this daily service is $500.00 payable through PayPal. Subscribers will receive an email invoice on the first billing date of each month which is payable within five calendar days of the invoice date.
We are attaching for your review a free sample copy of the report prepared using Closing data as of September 2, 2011.

To subscribe, simply send an email to info@Alpha-Advisor.com stating your desire to subscribe and the email address to which you would like your copy of the daily report directed. An invoice will be generated upon the receipt of your initial request. Once payment is received your subscription will begin. The initial billing will be prorated for the first month of service only. No refunds for early cancellation will be provided and no performance guarantee is implied or intended. As always, final trading decisions remain the responsibility of the trader.

Only payments through PayPal will be accepted. Should you elect to cancel your subscription simply do not pay the most recent invoice and the service will be terminated on the sixth day after the invoice date with no further obligation on your part.

For a free sample copy or if you have any questions, please direct your request to info@Alpha-Advisor.com for a prompt response.

Sincerely,

Vincent A. Lenarcic, Jr.
Publisher

The Carpenter

2011-08-01T14:25:00.001-07:00

Once upon a time, two brothers who lived on adjoining farms fell into
conflict. It was the first serious rift in 40 years of farming side-by-side,
sharing machinery and trading labor and goods as needed without a hitch.

Then the long collaboration fell apart. It began with a small
misunderstanding and it grew into a major difference and finally, it
exploded into an exchange of bitter words followed by weeks of silence.

One morning there was a knock on John's door. He opened it to find a man
with a carpenter's toolbox. "I 'm looking for a few days' work," he said.
"Perhaps you would have a few small jobs here and there I could help with?
Could I help you?"

"Yes," said the older brother. "I do have a job for you. Look across the
creek at that farm. That's my neighbor. In fact, it's my younger brother!
Last week there was a meadow between us. He recently took his bulldozer to
the river levee and now there is a creek between us. Well, he may have done
this to spite me, but I'll do him one better. See that pile of lumber by the
barn? I want you to build me a fence an 8-foot fence -- so I won't need to
see his place or his face anymore."

The carpenter said, "I think I understand the situation. Show me the nails
and the post-hole digger and I'll be able to do a job that pleases you."

The older brother had to go to town, so he helped the carpenter get the
materials ready and then he was off for the day. The carpenter worked hard
all that day -- measuring, sawing and nailing. About sunset when the farmer
returned, the carpenter had just finished his job.

The farmer's eyes opened wide, his jaw dropped. There was no fence there at
all.

It was a bridge! A bridge that stretched from one side of the creek to the
other! A fine piece of work, handrails and all! And the neighbor, his
younger brother, was coming toward them, his hand outstretched.

"You are quite a fellow to build this bridge after all I've said and done."

The two brothers stood at each end of the bridge, and then they met in
middle, taking each other's hand. They turned to see the carpenter hoist his
toolbox onto his shoulder.

"No, wait! Stay a few days. I've a lot of other projects for you," said the
older brother.

"I'd love to stay on," the carpenter said, "but I have many more bridges to
build."

God won't ask what kind of car you drove, but He'll ask how many people you
helped get where they needed to go.

God won't ask the square footage of your house, but He'll ask how many
people you welcomed into your home.

God won't ask about the clothes you had in your closet, but He'll ask how
many you helped to clothe.

God won't ask how many friends you had, but He'll ask how many people to
whom you were a friend.

God won't ask in what neighborhood you lived, but He'll ask how you treated
your neighbors.

God won't ask about the color of your skin, but He'll ask about the content
of your character.

God won't ask why it took you so long to seek Salvation, but He'll lovingly
take you to your mansion in Heaven, and not to the gates of hell.

God won't ask how many people you forwarded this to, but He'll ask why you
were ashamed to pass it on to your friends...

Weekly Wrap Up – April 30, 2011

2011-04-30T09:30:00.000-07:00

Following a mixed start to the week, stocks went on a four day surge which saw all of the major averages post new recovery highs. After losing 26.11 points (-0.2%) on Monday, the DJIA charged ahead closing on Friday 04/29/11 at 12810.54 up 2.44% for the week and a torrid 10.70% Year-to-date. Both the Russell 2000 and the Value Line Geometric achieved Buy Status over the past week joining their cohorts in the Active Traders Model now all at a Buy Recommendation.

A new multiyear low in the dollar index sent the materials and energy shares higher while the financial and technology sectors were relatively weak. The economic data (personal income and spending, Chicago PMI and Michigan sentiment) met expectations affirming the notion that there was nothing to worry about.

Breadth was positive for the week while volume stayed thin. Average trading volume averaged 71.5% of the yearly rolling average. Advancing issues led declining issues by a 19 to 10 ratio on the NYSE and by a 13 to 11 ratio on the NASDAQ. Participation hasn't been very impressive though. Share volume on the NYSE hasn't been above 1 billion shares since the end of March, 2011, when asset managers moved to rebalance portfolios.

The bulls were strongly in control as we closed the book on April. Momentum is quite bullish and any intraday weakness has led to an afternoon rally during the past few days. The busiest days of the earnings season are behind us and most of results have been better than expected. In addition, the falling dollar has become the best friend of the bulls. As long as the dollar stays weak, equities have little downside. With the exception of being short term overbought and needing some rest, the bulls haven’t shown signs of “going away” for the coming May.

But it might not be a bad idea to fasten your seatbelt. May 2010 was miserable; June 2010 was little better. Stocks are at 52-week highs and which can make them vulnerable to a sell-off. The word to describe the housing market can't be printed. Crude Oil has jumped nearly 25% this year, with gasoline prices in excess of $4 a gallon in many U.S. markets and up more than 27% for the year. Crude futures touched a new 31-month high Friday, bolstered by an ailing U.S. dollar and ongoing conflict in the Middle East and North Africa. The Dollars journey toward three-year lows made the dollar-denominated commodity a relative bargain, while violence in Libya bled over the border to the Tunisian town of Dehiba. Crude oil for June delivery added $1.07, or roughly 1%, to finish at $113.93 per barrel, after earlier peaking at $114.18. Crude Oil added 1.5% for the week and 6.8% in April, marking its eighth consecutive month of gains.

And, of course, the bubble erupting in Gold and Silver, could easily break. Gold continued its trek into record-high territory, capitalizing on the beaten-down U.S. dollar and simmering geopolitical tensions overseas. Thanks to this supportive fundamental backdrop, gold for June delivery ended up $25.20 on Friday, or 1.6%, at an all-time closing best of $1,556.40 per ounce. The precious metal rose 3.5% for the week, and 8.1% for the month.

We urge you to remain cautious as the new month opens on Monday. And at least some of the conditions that pushed the stock market lower a year ago are in place today: Stocks are at 52-week highs and, in some cases, at record highs, which makes them vulnerable to a sell-off. Last year the AAS Major Market Model generated a Sell signal on May 12, 2010 which ran through the Labor Day weekend. The declines experienced in the five members of the Active Trades Model reversed the then Year-to-Date gains and brought investors back into a temporary state of sanity. Are we being set up again for a repeat of that experience? Only time will tell.

Weekly Wrap Up – April 23, 2010

2011-04-23T08:27:00.001-07:00

With Standard & Poor’s beginning to discuss its potential downgrade of the U.S. government’s triple-A credit rating on Monday investors began the week by heading for the exits. The DJIA shed more than 200-points intraday before closing with a loss of 140 points (-1.1%). It was the blue chips largest point and percentage decline since a 242 point (-2.0%) decline on 03/16/11. However, on the heels of several good earnings reports, the DJIA reversed course as it gained 251 points (+2.1%) over the next two sessions while recording a new recovery high (DJIA - 12453.54) on 04/20/11. For the holiday shortened week, the DJIA gained (+1.8%) closing at 12505.

The DJIA along with the S & P 500 and the NASDAQ returned to Bullish or Buy status after Thursdays close. The remaining two members of the AAS Active Traders Model will most likely join in the change early next week should the earnings driven rally continue.

The bulls stayed in control Thursday on strong earnings from companies like AAPL, QCOM and TRV. The economic data (weekly jobless claims and Philly manufacturing index) was a little disappointing but was well offset by the earnings momentum. The DJIA pushed to a new multiyear high in a slow but steady session. The blue chip index closed above 12500 for the first time since May 2008, finishing up 52.45 points (+0.42%) at 12505.99. The NASDAQ outperformed on big gains in AAPL, QCOM and BIIB. The tech-heavy index finished up 17.65 points (+0.63%) at 2820.16, 14 points away from its February high. The S&P 500 closed up 7.02 points (+0.53%) at 1337.38, 6 points below its February high.

Breadth was positive but volume was thin ahead of the three day Easter Holiday weekend. More than 60% of the volume was on the upside on both marketplaces. Trading volume averaged 80.8% of the yearly average with the Buy-Sell-Neutral disbursement beginning to approach normal ranges.

The ability of the market to quickly rebound after Monday’s selloff and finish strong for the week shows that this market is not going to flip over easily and that short term downside risk should be limited. The question now is whether the S&P 500 and other major indexes will follow the DJIA to new highs. A breakout will set up a bullish summer while a bearish double-top could lead to “sell in May and go away” summer doldrums. It is time for the S&P 500 to breakout. With the Trend Component of the AAS Major Market Model reverting to Bullish status this model again has returned to Bullish Confirmed and the model portfolios will be rebalanced Monday.

Crude futures finished the week with modest gains Thursday, after a round of encouraging earnings reports stoked optimism about demand. Furthermore, the dollar continued to struggle against its foreign rivals, luring foreign-currency holders to the dollar-denominated commodity. By the close Thursday, June-dated crude oil futures tacked on 84 cents, or 0.8%, to end at $112.29 per barrel. For the week, Oil futures advanced 2.4%.

Gold extended its quest for record highs Thursday, with help from an ailing dollar. In addition, a dose of lackluster economic data amplified the precious metal's "safe-haven" appeal. After tagging an all-time peak of $1,509.60 an ounce in intraday activity, gold for June delivery finished with a gain of $4.90, or 0.3%, at $1,503.80 an ounce. For the week, the front-month contract soared 1.2%. Elsewhere, silver touched a new 31-year acme north of $46 an ounce, extending its weekly gain to 8.2% -- marking its best week of 2011.

The coming week trading will be extremely volatile, driven by FOMC news and a host of earnings releases. We recommend trading within the forecasted Support and Resistance levels for the AAS Active Traders members and using tight stops each day.

As mentioned previously, the three AAS Model Portfolio’s will be rebalanced during the session on Monday April 25, 2011. The following table includes the selections and number of shares of each selection to be included in the models. Each model will assume an Allocation level approximating the recommended levels in today’s AAS news letter.

Weekly Wrap Up – April 16, 2010

2011-04-17T08:49:00.000-07:00

Stocks drifted lower last week as the much anticipated earnings season got underway. The week saw both the AAS Major Market Model and the AAS Active Traders Model reverted to Bearish Recommendations resulting in all three of the AAS model portfolios closing all positions and moving into Money Market alternatives.

Tuesday saw the DJIA loose 117 points (0.9%). The decline was blamed on heightened concerns over the nuclear situation in Japan. The triple digit decline was the largest one-day hit since 03/16/11 when the blue chips lost 242.12 points (-2.0%). The remainder of the week was relatively flat with the exception of 56 point gain on Friday. For the period, the DJIA lost 38 points (-0.31%) closing at 12341.

On a percentage basis, the NASDAQ traded in line with the DJIA throughout the week. Like the DJIA, the NASDAQ lost one-percent of its value on Tuesday. This was followed by see-saw action for the remainder of the week despite continued weakness in market favorite Apple Computer (AAPL) and a big hit to Google (GOOG), following a weak earnings report. For the week, the NASDAQ lost 38 point loss (-0.89%), closing 2764, its second consecutive weekly decline. Do not be fooled by the AAS Active Traders model standings. The Vortex Indicator which we are becoming a bigger and bigger fan of is on the brink of going to Sell Status for all five members of this model. Be cautious, as we have often advised now is the time to measure twice and cut once.

Disappointing earnings from both GOOG and BAC set a negative start for equities Friday. But a slew of better than expected economic data (Empire State index, industrial production and Michigan Sentiment) quickly changed the scene. After a brief dip into the red near the open, the major indexes climbed throughout the morning session. With the exceptions of the financial and technology sectors, all the other major sectors scored modest gains. Momentum came off slightly in the afternoon as the major indexes went sideways.

Breadth was definitively positive while volume expanded some due to options expiration. The AAS Distribution Analysis confirms the Bearish status with a below average number of Buy recommendations and a higher than average number of Sell recommendations. The Trend Following component of the AAS Major Market Model returned to Bullish Status on Friday. However, both the Technical and the Sentiment components will take much longer to reflect changes in opinion.

The first week of earnings season finished with a little disappointment over earnings. But for the overall market, the mood stayed rather optimistic. VIX dropped to 14.92, a multi-year low, before settling at 15.32 today. While it is peculiar to see VIX at a multi-year low while the S&P 500 is off its February high, a multi-year low VIX usually indicates high complacency in the market. Should the VIX start rising, it would be negative for stock prices.

Crude futures once again overcame an early bout of weakness Friday, ending higher as encouraging economic data bolstered hopes for increasing demand. Furthermore, escalating geopolitical tension in Libya and Nigeria amplified fears about prolonged supply disruptions. By the close, May-dated crude oil futures added $1.55, or 1.4%, to finish at $109.66 per barrel. For the week, however, Oil surrendered 2.7%.

Gold futures rallied to a new record finish Friday, as data showing soaring prices in China boosted the metal's appeal as an inflationary hedge. After tagging an intraday peak of $1,488.60 an ounce, gold for June delivery ended with a gain of $13.60, or 0.9%, at $1,486 an ounce. Elsewhere in the metals market, May-dated silver added 91 cents, or 2.2%, to end at a 31-year high of $42.57 an ounce. For the week, gold advanced about 0.1%, while silver tacked on 4.8%. We have developed a keen sense of appreciation for the ETF GLTR Physical Precious Metal Basket Shares. This ETF began trading in October, 2010 and we have traded it from the issuance with great satisfaction. You will find it has been recently added to the AAS Active Traders Portfolio. It is both a good hedge if you are not interested in bonds and a good selection in the Commodities grouping which has been leading the Portfolio Building list for a while now.

Next week will see the earnings parade pick up some momentum with the major’s beginning to report first quarter results. For short term traders sticking to broad index options is probably the best course of action for the next several weeks. We find the first three or four weeks of earnings season to be the most difficult to trade individual stock options. More emotional buying and selling driven by related news throws every good system into a fog bank.

The Active Traders Portfolio has not had but one trade since the beginning of the year. You can see the quarterly performance on our blog site, Alpha for the Independent Thinker. We have added a fixed income component to the portfolio in by adding two High Yielding ETF’s to the mix since we last discussed this grouping.

Weekly Wrap Up – April 10, 2010

2011-04-10T16:15:00.000-07:00

Against a back drop of spiking oil prices, another earthquake in Japan, continued turmoil in the Middle East and the possibility of a shutdown of the U.S government, all of the major markets spent most of the week locked in a narrow range. The Dow Jones Industrials eked out a small gain of 0.04% for the week but the remaining four members of the AAS Active Traders Model all closed down for the week from the Monday open. All five members remain significantly in Over Bought territory. Both the Active Trades Model and the AAS Major Market Model retain the Buy recommendation.

On Friday, following strong performances in the International markets overnight, the major indexes opened higher, but it was downhill for the rest of the day with the weekend coming and a potential government shutdown looming. While some last hour buying cut the deficit in the DJIA from nearly 90 points earlier to less than 30 points at the close, all of five members of the Active Traders Model along with the DJ Transport and the DJ Utility Indexes again closed above their 20-day moving averages.

The INDU, OTC, S & P 500 and the Value Line Geometric all closed out Friday just above the forecasted support levels published on the prior Saturday. The Russell 2000 closed flat against the forecast. Not a strong week in either direction but within forecasted ranges.

While there was no big damage, the major indexes are struggling. Both the S&P 500 and the NASDAQ failed to break above their February highs. Another technically negative development is that after two days of losses, both the short term and long term MACDs of the S&P 500 are now declining indicating the bulls are losing momentum. The fact that the long term MACD started to decline after only two days of losses also suggests that the rally off the March low is a weaker one than those we had last September and the first two months of 2011.

Distribution remains anemic with Neutral Ratings dominating the AAS universe. Our Asset Allocation recommendation was reduced to 62.5% Invested and 37.5% Cash or hedged. We have elected to no adjust the holding levels in the AAS Model portfolios at this time. Adjustments may be made after the markets open Monday A.M.

Earnings season kicks off next week with AA reporting on Monday. Things could change quickly during reporting season so it is probably a good idea to stay cautious and get some hedges for your portfolio while VIX is still low.

A new 52 week low in the dollar index propelled crude oil to new two and a half year highs and gold to a record high. Crude futures continued their relentless climb, peaking above $112 per barrel amid ongoing conflict in key oil-producing countries. Violence continued in Nigeria ahead of this month's presidential elections, and reports out of Libya Friday revealed damage to the country's oil fields -- underscoring the growing threat of supply disruptions. Against this backdrop, weakness in the U.S. dollar only accelerated oils precipitous price rise. Crude oil for May delivery ended on a gain of $2.49, or 2.3%, at a new 30-month peak of $112.79 per barrel. Crude rallied almost 4% from last Friday's close, marking its third straight winning week.

Gold also gained ground Friday, with bullion also catching a boost from the downtrodden dollar. The Gold also capitalized on its status as an inflationary hedge, as crude oil's new multi-year high generated some anxiety about rising consumer prices. By the close Friday evening , gold for June delivery was up $14.80, or 1%, at $1,474.10 per ounce. On an intraday basis, the contract tapped a new all-time peak of $1,476.20 per ounce. For the week, gold gained 3.2%.

Weekly Wrap Up – March 26, 2010

2011-03-26T09:47:00.000-07:00

Hawkish talk from several regional Fed presidents fueled higher levels of caution among traders Friday sending the dollar index spiking and stocks retreating by noon. Buying interest dried up while there was little selling pressure. The tech-heavy NASDAQ finished just a hair above its declining 20-day moving average. With the technology stocks underperforming Friday, there is no telling whether the NASDAQ will be able to keep its head above its 20-day moving average into the next week. An underperformance in the tech sector would suggest that the correction is not over. Sector rotation has been one of the major driving forces in the recent rallies. Should the money coming out of the techs go into the financials, we will likely be OK.

The members of the AAS Active Traders Model all returned to Buy status this past week with the DJI, SPX, OTC and the RUT making the move after the Close Wednesday followed with a buy recommendation for the VLIC on Thursday. All five members remain in an Over Bought status.

The AAS Major Market Model retains the Bearish status announced last week. Our asset allocation recommended levels remain unchanged.

As the first quarter draws to a close, the continuing crises in Japan and Libya are expected to make volatility a continuing theme in stock markets for the coming weeks. In spite of the news driven volatility the VIX dropped to 17.91 on Friday below the threshold level of 20.00 and significantly lower than the 20-day moving average.

As the market continues to be dominated by global news and events, investors must remain aware of the potential impact of these events on earnings for the quarter and the remainder of the year. Such changes will significantly impact sector rotation.

In Washington, Congress returns from a week off, with the Senate back in session on Monday and the House returning on Tuesday.
Crude Oil futures settled below the breakeven level Friday, with the front-month contract retreating after touching a fresh two-year high earlier this week. However, the continuing violence in Libya kept Crude Oil losses to a minimum. Crude oil for April delivery gave up just 20 cents, or 0.2%, to finish at $105.40 per barrel, but the contract finished up the week on a healthy gain of 4.3%.

Gold futures also retreated Friday, moving inversely to a surging U.S. dollar. The dollar caught a lift from Friday's robust GDP data, as well as Philadelphia Fed President Charles Plosser's comment that "Monetary policy will have to reverse course in the not-too-distant future" -- hinting at a less accommodating central bank stance on the horizon. Gold for April delivery gave up $8.70, or 0.6%, to finish at $1,426.20 per ounce, narrowing its weekly advance to 0.7%.

This is the most beautiful advice I have ever received!

2011-03-23T07:56:00.000-07:00

An Angel says, 'Never borrow from the future. If you worry about what may happen tomorrow and it doesn't happen, you have worried in vain. Even if it does happen, you have to worry twice.'

1. Pray

2. Go to bed on time.

3. Get up on time so you can start the day unrushed.

4. Say No to projects that won't fit into your time schedule or that will compromise your mental health.

5. Delegate tasks to capable others.

6. Simplify and unclutter your life.

7. Less is more. (Although one is often not enough, two are often too many.)

8. Allow extra time to do things and to get to places.

9. Pace yourself. Spread out big changes and difficult projects over time; don't lump the hard things all together.

10. Take one day at a time.

11. Separate worries from concerns. If a situation is a concern, find out what God would have you do and let go of the anxiety. If you can't do anything about a situation, forget it.

12. Live within your budget; don't use credit cards for ordinary purchases.

13. Have backups; an extra car key in your wallet, an extra house key buried in the garden, extra stamps, etc.

14. K.M.S. (Keep Mouth Shut). This single piece of advice can prevent an enormous amount of trouble.

15. Do something for the Kid in You everyday.

16. Carry a Bible with you to read while waiting in line.

17. Get enough rest

18. Eat right.

19 Get organized so everything has its place,
.
20. Listen to a tape while driving that can help improve your quality of life.
.
21. Write down thoughts and inspirations.

22. Every day, find time to be alone. REPEAT...every day, FIND time to be alone.

23. Having problems? Talk to God on the spot. Try to nip small problems in the bud. Don't wait until it's time to go to bed to try and pray.

24. Make friends with Godly people.

25. Keep a folder of favorite scriptures on hand.

26. Remember that the shortest bridge between despair and hope is often a good 'Thank you Jesus.'

27. Laugh.

28. Laugh some more!

29. Take your work seriously, but not yourself at all.

30. Develop a forgiving attitude (most people are doing the best they can).

31. Be kind to unkind people (they probably need it the most).

32. Sit on your ego.

33 Talk less; listen more.

34. Slow down.

35. Remind yourself that you are not the general manager of the universe.

36 Every night before bed, think of one thing you're grateful for that you've never been grateful for before. GOD HAS A WAY OF TURNING THINGS AROUND FOR YOU.

'If God is for us, who can be against us?'
(Romans 8:31)
.

Alpha Advisor Wrap Up - March 19, 2011

2011-03-19T09:39:00.000-07:00

Thursday and Fridays rally didn’t save the major indexes from turning in losses for the week just ending. The AAS Active Traders Model continues to rate all five of the major indexes with a Sell Recommendation. At Fridays close the AAS Major Market Model joined its short term brother with an overall Bearish Market call as the Sentiment component joined the Technical component with a Bearish Status. The three AAS Model Portfolios are now 100% in Cash.

The intermediate downtrend was confirmed after all the major indexes dipped below their 20-day and 50-day moving averages this past Monday. While we could get more counter-trend rally next week, the 50-day moving averages are going to be resistance on the bounces. After no bad news for two days, the market’s perception of the Japan nuclear reactors situation seems to have turned optimistic. This makes the market very vulnerable to any future bad news. With both short term and intermediate term momentum readings still bearish, it doesn’t look like the correction is over.

Oil futures finished in the red Friday, after Libya's foreign minister said the government had declared a cease-fire in the wake of the U.N.'s authorization of military action. However, Oil pared its losses in afternoon trading, after an opposition source told CNN of continued "fierce fighting" in the region. In the same vein, President Obama warned embattled leader Muammar Gaddafi that failure to comply with the U.N.'s demands could result in military action. By the close, April-dated crude futures trimmed their deficit to 55 cents, or 0.6%, to end at $100.86 per barrel. For the week, the front-month contract finished relatively flat, tacking on 9 cents.

Gold, meanwhile, edged higher today, thanks to uncertainty in Libya and the dollar's dip in the wake of efforts by the G7. More specifically, the finance ministers' foreign exchange intervention pushed the U.S. Dollar to a four-month low versus the euro, encouraging foreign-currency holders to jump on the relatively cheap dollar-denominated commodity. April-dated gold advanced $11.90, or 0.9%, to end at $1,416.10 an ounce. For the week, however, the front-month contract gave up 0.4%.
A few selected commodities and the six U. S. Treasury ETF’s are the most attractive alternatives in today newsletter. There are a few stocks for the more aggressive to sort through, but our recommendation is to stay nimble and very conservative in your portfolios.

Mid Week Focus

2011-03-16T04:15:00.001-07:00

The major indexes closed off their intraday lows yesterday, the losses were significant. The last minute selling indicated traders don’t believe we have seen the near term lows. In addition, VIX’s 15% jump to 24.32 tells us there may be more roller coaster rides in the coming days. The AAS Active Trades Model remains with Sell Recommendations for all five of the major indexes followed by that model. AAS Asset Allocations levels remain at 25% Long and 75% Hedged or Cash.

It will take a few days, maybe weeks, before the powers that be develop an accurate analysis of the situation in Japan. When a market has panic selling, it usually gets a relief rally soon after. Once the relief rally is over, lower prices follow. Watch for signs of rip selling and stay nimble.

Tuesday, March 8, 2011

2011-03-08T05:11:00.000-08:00

The technical condition of the major indexes continues to deteriorate. At the close Monday the Russell 2000 (RUT) was rated SELL along the four other major indexes tracked by the AAS Active Traders Model. The S&P 500 finished just below its uptrend line drawn by connecting it August and November lows. But it is not all bad. The major indexes did hold above last week’s lows. The NASDAQ was able to close above its 50-day moving average after dipping below during the day. However, the bulls look vulnerable at this juncture. Another day of weakness will possibly put the NASDAQ under that important moving average. The financial and transportation stocks continue to perform badly and, with the exception of the energy sector which benefits from higher oil prices, while there has been no upside leadership recently. With VIX above 20, expect more volatile intraday swings over the balance of this trading week.

March 1, 2011

2011-03-01T05:09:00.000-08:00

While the $INDU finished with a nearly triple digit gain yesterday, the underlying market wasn’t that strong. The $QQQQ and $RUT shares lagged throughout the day. The out performance by the $INDU looked like window dressing in anticipation of the well known first-of-the-month surge. Technically, both the short term and long term MACDs of all five major indexes in the AAS Active Traders Model still point lower. So, the risk of a correction is not gone.

Where are the Markets Going?

2011-02-06T09:46:00.000-08:00

As the result of recent AAS newsletters and the subsequent post to my blog site yesterday, I have gotten many inquiries requesting further explanation as to both the returns of the model portfolios and the overall direction of the U. S. Domestic markets.

At the present time, the markets are in a trending mode and have been since early December, 2010. What we have been experiencing of late has been driven by the resurgence of trading activity driven by professional portfolio rebalancing, plus fresh money flow coming from individual investors returning to the markets. Daily trading volume has averaged at 92% of the rolling one year average over since early December, which is significantly higher than we had experienced for the majority of 2010. Our technical indicators have been in a Bearish mode since December 31, 2010. Our Major Market Model remains Bullish on the strength of Investor Sentiment and the Trend. The weakness in the markets, as evidenced by the Technical indicators is reflected in the reduced Asset Allocation levels which we have been recommending.

The trend in the markets is troublesome at this time since in all likelihood, it will prove to be unsustainable. A quick review of the AAS Model portfolios in our newsletter indicates that on an annualized basis, we might anticipate a Total Return for the year between 50% on the high side to a low of 22%. Given the fact that the economy is only anemically recovering and global problems of all types and magnitude persist, this is not a likely scenario. Should all of today’s problems miraculously resolve themselves, we are still faced with the reality that over the past fifty years the S & P 500, along with the Dow Jones Industrial Average, have only returned on average between 11% and 14% per annum.

I, for one, am searching for some definitive, concrete evidence that the trend is sustainable. To date I have found none. A weekly review of the AAS Sector rankings does not surface any one or two sectors which have continually lead the group for the first five trading weeks of this year.

A broader analysis of sector returns supports the earlier stated concerns about sustainability. Reviewing the year-to-date returns of all the major markets and sectors covered by the Wall Street Journal and analyzing those returns points to the same conclusion. Everything at this time is over-heated and warrants enhanced risk management on the part of the investor.

The markets are seeking consistent leadership.

We are grateful for the returns we have experienced in all the model portfolios including the Active Traders Portfolio but continually express caution as to the near term.

Below are several charts which may help you further interrupt my concerns. In each Chart is the Vortex Indicator which many of you may not be familiar with. I have come to depend more and more on this indicator in my personal trading.

The Vortex Indicator was inspired by the work of an Austrian inventor, Viktor Schaugerger who studied the flow of water in rivers and turbines. Etienne Botes and Douglas Siepman developed the idea that movements and flows within financial markets are similar to the vortex motions found in water. The Vortex Indicator was also partly inspired by J. Welles Wilder’s concept of directional movement, which assumes the relationship between price bars gives clues as to the direction of a market.

A vortex pattern may be observed in any market by connecting the lows of that market’s price bars with the consecutive bars highs, and then price bar highs with consecutive lows. The greater the distance between the low of a price bar and the subsequent bar’s high, the greater the upward or positive Vortex movement (VM+). Similarly, the greater the distance between a price bar’s high and the subsequent bar’s low, the greater the downward or negative Vortex movement (VM-).

If you are interested in more information on the Vortex Indicator, it is readily available at Wikipedia by clicking the following link, Vortex Indicator.

What you see below are two different pictures of the three markets using the same indicators. One set is over the past three months and the second set over the past year. Each set is consistently presented using daily data. In both sets, what you should see is that all three markets have been bouncing off of their resistance levels. Hopefully, these graphs will aid you in your personal assessment of the markets.

The graphs were done using FreeStockCharts.com a Worden Brothers creation. Over the years I have personally used Worden Brothers products and have found them to be affordable and consistently well presented and serviced.

Alpha Advisor Active Traders Report February 5, 2011

2011-02-05T09:01:00.001-08:00

Click on each insert to enlarge for viewing.

Many investors including this writer are looking for a pullback. The torrid pace at which the major markets have burned through January and into February are technically too heated to carry on much longer. This way of thinking has almost become a wall of worry for the market to keep climbing. Technically, the underlying market continues to be less strong than the five major indexes covered by the Active Trades Model would indicate. Friday’s market was another example of the large caps leading while small caps lag. Will this phenomenon continue next week? There are a couple of things to keep your eyes on. One is the Russell 2000 Index which closed just above the 800 level Friday. A decisive breakout above that resistance level would be very positive for the overall market. However, should the Russell 2000 turn back down, head-and-shoulders top would develop which would be negative for the overall market. The other thing to watch is VIX. VIX closed at 15.93 Friday. It is very close to the December low of 15.40. A declining VIX is usually positive for stock prices. Should VIX bottom out and turn up, it would be negative for stock prices.

The AAS Asset Allocation Range has again shifted to the 62.5% Long and 37.5% Cash or Hedged. Should this condition persist into mid week we will again allocate to stocks to match the recommendation.

Alpha Advisor Service – Active Traders Model

Russell 2000 Update

2011-01-27T06:15:00.000-08:00

Many are asking how much longer can the rally go? The answer most likely depends on the small caps. The Russell 2000 Index, which has lagged in the past week, did better today. However, its momentum readings are still bearish. Should the small caps catch up, we could get another leg in the rally. On the other hand, if the small caps continue to diverge from the larger caps, the overall market is likely to top out soon. The Russell 2000 plays an important part in how individual investors perceive the market. The AAS Active Traders Model has had a Sell on the group for the past several weeks. As of last night the Value Line has regained a Buy recommendation.

To enlarge the charts below click on the image.

An Obituary printed in the London Times

2011-01-26T08:03:00.000-08:00

Today we mourn the passing of a beloved old friend, Common Sense, who has been with us for many years. No one knows for sure how old he was, since his birth records were long ago lost in bureaucratic red tape. He will be remembered as having cultivated such valuable lessons as:

- Knowing when to come in out of the rain;
- Why the early bird gets the worm;
- Life isn't always fair;
- and maybe it was my fault.

Common Sense lived by simple, sound financial policies (don't spend more than you can earn) and reliable strategies (adults, not children, are in charge).

His health began to deteriorate rapidly when well-intentioned but overbearing regulations were set in place. Reports of a 6-year-old boy charged with sexual harassment for kissing a classmate; teens suspended from school for using mouthwash after lunch; and a teacher fired for reprimanding an unruly student, only worsened his condition.

Common Sense lost ground when parents attacked teachers for doing the job that they themselves had failed to do in disciplining their unruly children.

It declined even further when schools were required to get parental consent to administer sun lotion or an aspirin to a student; but could not inform parents when a student became pregnant and wanted to have an abortion.

Common Sense lost the will to live as the churches became businesses; and criminals received better treatment than their victims.

Common Sense took a beating when you couldn't defend yourself from a burglar in your own home and the burglar could sue you for assault.

Common Sense finally gave up the will to live, after a woman failed to realize that a steaming cup of coffee was hot. She spilled a little in her lap, and was promptly awarded a huge settlement.

Common Sense was preceded in death, by his parents, Truth and Trust, by his wife, Discretion, by his daughter, Responsibility, and by his son, Reason.

He is survived by his 4 stepbrothers;
I Know My Rights
I Want It Now
Someone Else Is To Blame
I'm A Victim

Not many attended his funeral because so few realized he was gone.

It will be a very Volatile week in the markets

2011-01-24T04:20:00.000-08:00

Although the up-trends of the DJIA and the S&P 500 stayed intact, the deterioration in the broader market is disconcerting. The Value Line Geometric, Russell 2000 index and the NASDAQ composite have all dipped below their respective 20 day moving averages while two of the three are rated sell by the Active Traders Model. The tech sector has lost its upside leadership. So has the materials sector. The question now is what can lead the market in the next month or so?

Alpha Advisor 2010 - Performance Review

2011-01-08T11:00:00.000-08:00

This will be our final broad based distribution of statistical, trading and performance information to non-subscribers. Effective January 15, 2011 we will only distribute to paid subscribers of the AAS Platinum Newsletter, so if you like our work, we encourage you to subscribe today. Instructions to subscribe are at the end of this blog.

2010 Review

We enjoyed another stellar year of performance from the AAS Major Market Model in 2010. The AAS Model Equity Portfolio closed the year with a gain of 20.26% as compared to the model benchmark the Standard and Poor’s 500 index which gained 12.78% over the same period. This is a 748 basis point gain for the year, which is greater than the model objective and which is to achieve average returns greater than the benchmark by 500 basis points annually.

Market Timing

This out-performance was accomplished with two sets of signals. The first Sell occurred on January 27, 2010 with a re-entry on February 19, 2010. The second Sell was dated May 18, 2010 with a subsequent re-entry signal on September 3, 2010. Having taken these recommended trades, an investor would have been invested for 63.6% of the trading days in 2010.

Had you simply traded the ETF “SPY” which mimics the benchmark, you would have achieved the same return for the year as the benchmark while experiencing roughly half of the drawdown or decline in the market value of portfolio. The peak drawdown of -16% for the Buy-and-Hold approach would have occurred in July 2010. The timed approach experienced a -8.7% drawdown during the May 2010 period. How one expresses the value of this benefit is unique to each investor, and as such, we will leave it up to your own evaluation.

Asset Allocation

The AAS Model Equity Portfolio benefits not only from market timing but also technical asset allocation. For 2010, the portfolio asset allocation average was 62.5% and ranged from 0% to 100% allocated. The graph below sets out the approximate time frames for the two sets of signals. The red arrows denote Sell dates, and the blue arrows denote the Buy dates. The two green arrows in the fourth quarter denote the dates which the Asset Allocation Recommendation was adjusted downward. Through the asset allocation process and timing, the portfolio gained 20.26% versus 12.78% for the benchmark, a 748 basis point enhancement.

Stock Selection

The analyst in me requires that I point out again that this gain was accomplished while being invested for only 63.6% of the year. This translates into an average full time equivalency return of approximately 31.86% while the portfolio was invested. So, the AAS stock selection process added almost the same amount to the yearly performance of the portfolio as did the Timing and the Asset Allocation process.

A Platinum subscriber to the bi-weekly AAS Newsletter would have paid $49.99 a month or $599.88 for the year. By any measure the AAS Newsletter is a tremendous value.

The second model portfolio we feature is the AAS Active Traders Portfolio which was first introduced to our readers on August 14, 2010. This portfolio holds only thirteen (13) positions versus the thirty (30) positions of the AAS Equity Model portfolio, and it does not participate in either the timing or asset allocation features of the sister portfolio. Here the investor relies solely on stock selection and the systemic buy and sell rules which were detailed in the original release.

Again, the AAS Active Traders Portfolio measures performance in relationship to the Standard and Poor’s 500 index. Since we first introduced the portfolio on August 14, 2010 it has gained 44.35% versus 16.53% for the benchmark index. The portfolio remained fully invested and experienced only four trades during this period of time.

Had this particular model portfolio been available to subscribers from the beginning of 2010, the numbers would astound you. The gain was 86.41% for the portfolio versus 12.78% for the benchmark with an average drawdown of -6.29%. There were a total of 23 trades made during the year, 13 original trades when the portfolio was first established and 10 subsequent buy or sell transactions.

The AAS Active Traders Portfolio was designed for the investor who was interested in taking an active roll in managing his or her own investment portfolio but does not have the time to do so on a daily basis. It trades weekly and selects its holdings from a much more robust group of underlying securities than does its sister portfolio. In periods when there is a strong positive trend in the market, we would expect a nominal level of trades to be undertaken. This was the case during the period of time between the portfolio’s introduction in our August 14, 2010 blog and the end of the year.

However, in periods of rapid market decline, the tight Sell rules along with the Trailing stop loss and the capital preservation rules within the trading system, generate more frequent trades, thus minimizing losses and preserving capital. A quick review of the above performance graph of the period between April and September supports the thesis.

The following table takes our AAS Active Traders Portfolio to the next level in utilization. The underlying list of securities from which we draw upon for the Active Traders Portfolio is segregated into thirty-two (32) discreet sectors. We then apply the very same trading rules to each of the various thirty-two sectors in order to determine which sectors should be focused upon for investment opportunities.

Each sector portfolio began the year 2010 by establishing 13 positions just as the Active Traders portfolio did, and the followed the same trading rules as the master portfolio for the remainder of the year. The win / loss details cover only the activity of the year 2010.

We then took an additional step and ran a seven year historical study to determine if the results would have held up over multiple years. Impressive results to be sure!

Changes to come in the New Year 2011

• Effective January 15, 2011 the Weekly Wrap Up, AAS Active Traders Portfolio and Technical Comments will only be distributed to active Platinum level Subscribers, our most popular subscription.

• Both the Silver and Gold version will no longer be published.

• The AAS Platinum format is currently being reviewed and suggestions are solicited from active subscribers for modifications in layout and presentation.

• Our web site is in the process of re-design and will be launched in Q1 of this year.

• The ETF category will be expanded to include a larger universe for your selection. Rydex, Profunds and Fidelity funds will be dropped from the universe which we track along with the model Funds and ETF Portfolio’s.

Again, this will be our final broad based distribution of statistical, trading and performance information to non-subscribers. Effective January 15, 2011 we will only distribute to paid subscribers of the AAS Platinum Newsletter, so if you like our work, we encourage you to subscribe today.

The subscription process is very simple. Send me an email to VLenarcic@Alpha-Advisor.com requesting that your email address be added to the Platinum subscribers list. Your email address will be added immediately. On the 15th of each month you will receive an email invoice through PayPal which is then payable through PayPal within ten days. Payment instructions are included with each email. If you elect to pay the invoice you will continue to receive the bi-weekly newsletter. Should you decided to stop receiving the newsletter, do not pay the invoice within ten (10) days of receipt and your name will be removed from the subscriber list with no further communication required.

UP 43.4% since August 14th the Active Traders Portfolio Weekly Review December 19, 2010

2010-12-19T13:46:00.000-08:00

Slow and steady. That seems to be what the bulls have had the markets doing lately. Stocks closed on this quadruple witching day in an uneventful fashion. Good earnings reports kept the NASDAQ in the positive territory Friday, but it didn’t do much for the overall market. Breadth finished marginally positive while trading volume, as measured by the AAS Distribution analysis, expanded to 87% of the yearly rolling average. Advancing issues compared to declining issues were flat for the week on both the NYSE and the NASDAQ. New Highs as compared to New Lows on the NYSE were at 3:1 and 8:1 on the NASDAQ.

The VIX, known as the fear gauge, settled down 7% at 16.11, the lowest level since April 20, 2010. This suggests that complacency in the market is high which could spell trouble to stock prices down the road should it persist. However, the seasonal factors favor the bulls in the near term as we head into the Christmas week.

The AAS Major Market Model Remains at a Buy recommendation with the Asset Allocation level having increased to 62.5% invested and 37.5% Cash or Hedged.

The AAS Active Traders Model also remains in a Buy status for all five of the members of this model.

Crude futures ended a wishy-washy week modestly higher on Friday. On the plus side, supportive economic indicators and cold weather across the country bolstered demand for oil. However, fresh fears about Europe's fiscal health limited the commodity's upward momentum. Against this mixed backdrop, January-dated crude oil futures finished with a gain of 32 cents, or 0.4%, at $88.02 per barrel. For the week, the front-month contract gained 0.3%.

Gold futures also settled in the black Friday, erasing an early deficit thanks to a last-minute buying spree. However, the strengthening greenback calmed gold's rally just above breakeven, making it more expensive for foreign-currency holders to scoop up the dollar-denominated commodity. By the close, gold for February delivery advanced $8.20, or 0.6%, to end at $1,379.20 an ounce. For the week, though, the precious metal remained relatively flat, surrendering 0.04%.

Levels to Watch in Trading:

On the Calendar Next Week:

MONDAY: No reports to be released.

TUESDAY: ICSC Goldman Store Sales report to be released.

WEDNESDAY: MBA Mortgage Applications, GDP, Existing Home Sales, Oil Inventories; FHFA House Price Index do out.

THURSDAY: NYSE will close early; Durable Goods Orders, Personal Income and Spending, Weekly Jobless Claims, Consumer Sentiment and New Home Sales data to be released.

FRIDAY: Markets closed for Christmas.

Investor Sentiment is Bearish with the CBOE Index Put/Call Ratio Bullish at 0.78, down from 1.20. As previously mentioned the VIX, remained in Bearish territory at 16.11 down from 17.61. This is the lowest number the VIX has reached since April 2010.

Bullish indicators include the low Dividend Yield Spread (2.84 vs. 2.73), the Odd Lot Short Ratio (42.72 vs. 45.92), the Public-Specialists Short Ratio (13.28 vs. 11.27) and strong short interest at both the NYSE and the NASDAQ despite a 1.2% decline at the NYSE and a 0.1% drop at the NASDAQ for the period ending 11/30/10.

Bearish indicators include the very low Mutual Fund Liquid Asset Ratio (3.5% vs. 3.5%), which is near an all time low, the high Percentage of Bullish Investment Advisors (56.2% vs. 55.4%) and the low Percentage of Bearish Investment Advisors (20.5% vs. 21.3%).

Once again, the action was somewhat muted last week as the major averages traded sideways while working off their overbought conditions. However, some of the indicators that we follow, in particular the Momentum and ROC (Rate of Change), began to show signs of reversing on Friday.

Throughout the week, most attempts to sell-off the market were met with good buying interest which shows the bulls remain firmly in control at this juncture. Although volume remains stubbornly low, the NYSE Advance/Decline line is still very close to recording an all time high.

Also, it should be noted that the blue chips are finally beginning to participate in the move up after lagging the broader indexes for the past few weeks. Most of the other indexes took out their November highs last week and now the DJIA has joined that group in recording a new recovery high last week.

Although European stocks hesitated last week, the overseas markets are trending higher as growth prospects improve. The U.S. market should benefit from this trend and trade higher going into early 2011.

Given that the coming week will be shortened because of the Christmas holiday; active investors are likely to trade in smaller volumes and with greater caution than usual. Most traders will be taking an attitude of caution going into the year end not wanting to upset a profitable year with wrong way trades.

The bright side of the past week was my Options Trading program, which in the face of a flat market, experienced an unusually profitable week. While the program was already profitable through Wednesday, I caught an extremely fortuitous trade Thursday. My indicators had picked up the weakness in Visa (V) and MasterCard (MA) the prior day but I passed on those trades in favor of trades with the QQQQ, IWM and SPY.

However, Thursday when the same indicators came back with another Buy recommendation I bought Visa (V) $80 Jan 11, Puts. Made the week and more than offset the weakening performance of the two equity portfolios.

The Active Traders Portfolio was down -0.32% on the weakness of Netflix (NFLX) and Liberty Media Corp. (LCAPA). No changes in this portfolio at this time.

At this time each year I do my Jesse L. Livermore imitation, by personally reducing my portfolio activities to purely defensive actions and spending a great deal of my time reviewing my trading activity of the prior year.

I look very hard at what worked and what did not, why it worked or why it did not and what I might have done better over the prior year. My time is consumed with visiting with my trusted advisors and friends while developing my trading strategies for the up and coming year. It gives me a strong position from which to begin my new, fresh trading year with vigor, new ideas and gusto.

I would like to take this time to wish each of you a very Merry Christmas and a Happy New Year! May 2011 bring you peach, joy and prosperity.

Weekly Wrap Up and Portfolio Review 12-10-10

2010-12-12T14:44:00.000-08:00

The NASDAQ Composite (2,637.54) closed at its highest level in three years, while the S&P 500 Index (1,240.40) rose to heights it hadn't touched in more than two years. Even the under performing Dow Jones Industrial Average managed to climb above 11,400 in the final 30 minutes of trading on Friday.

For the first four and a half days of the week, the Dow Jones Industrial Average just treaded water, trading in an intraday range between about 11,340 and 11,440, and closing in an even narrower range below 11,400. The Dow finally closed above 11,400 on Friday. But let's not be bearish. Many feel that the 2010 bull market is still healthy with the S&P 500 Index (SPX) and the NASDAQ Composite (COMP) both closing the week at multi-year highs.

All that being said, stocks ended the week higher despite the lack of definitive progress on a tax bill as investors optimism was fueled by positive economic and corporate news. As such, the AAS Buy rating has remained intact for all five of the members of the AAS Active Traders model. Additionally, the AAS Dynamic Portfolio remains allocated to approximately 50% invested and 50% cash per the AAS Major Market Model.

The CBOE Volatility Index (VIN), widely considered the best gauge of fear in the market, rose above 17.61 as of Friday’s close with continuing Bearish implications.

Residual caution about European sovereign debt problems, increasing tensions on the Korean peninsula, and the growing concerns over the fact it may take longer for Washington to reach a compromise on a tax package than first thought caused performance in the markets to be somewhat subdued heading into the weekend.

It was the previous Friday that we had a big rally driven by people believing that the tax cut compromise was a done deal. Now, though the market believes an agreement will be reached, it’s not a sure thing that it will be an easy and painless process.

Without major economic catalysts this past week, stocks were largely driven by portfolio positioning ahead of expiring futures and options at the end of the coming week, and in anticipation of critical economic reports, including data on inflation and retail sales to be released in the coming week.

Next week we should see increased volume and trading activity almost every day.

MONDAY: Besides being FedEx's busiest day, there are no reports scheduled.

TUESDAY: NFIB Small Business Optimism Index, Producer Price Index, Retail Sales and Business Inventories reports, plus the FOMC meeting announcement, are to be released.

WEDNESDAY: Consumer Price Index, MBA mortgage applications, Empire State manufacturing survey, Industrial Production, Housing Market index, EIA Petroleum Status Report along with the EIA Petroleum Status Report are due for release.

THURSDAY: Housing Starts, Jobless Claims, plus the Philadelphia Fed survey will set the tone for the trading day.

FRIDAY: Leading indicators and Quadruple witching will drive the day.

On the technical front, with help from a smaller than expected trade deficit and a higher than expected Michigan sentiment reading, stocks finished the week strong.
The energy stocks were relatively weak as crude oil pulled back on a stronger dollar. The financials continued their rally after a slow start in the morning while all the other sectors gained modestly. Breadth was decisively positive while trading volume expanded to 95% of the rolling one year average. Advancing issues led declining issues by an 18 to 11 ratio on the NYSE and by a 2 to 1 ratio on the NASDAQ. Friday saw more than three quarters of the volume on the upside in both markets.

Crude futures turned lower Friday, tumbling in the wake of China's decision to raise its banks' reserve requirements, and ahead of the Organization of Petroleum Exporting Countries' (OPEC) weekend summit. Against this backdrop – and despite Morgan Stanley's forecast for $100-per-barrel oil in 2011 – January-dated crude oil futures gave up 58 cents, or 0.7%, to settle at $87.79 per barrel. For the week, the front-month contract declined 1.5%.

Expectations of an interest-rate hike in China plus encouraging economic data diminished traders' appetite for "safe-haven" assets like gold. By the close, gold for February delivery shed $7.90, or 0.6%, to end at $1,384.90 an ounce. For the week, the Gold had also declined by 1.5%.

Levels to Watch in Trading:

Investors have turned very optimistic lately. This can be seen among both the professionals and the individual investors. This week’s Investors Intelligence Bullish Advisor reading was back at 56.2, the high we had in mid-November while the AAII sentiment reading jumped 3.4% to 53%. The optimism can also be seen in low CBOE equity put/call ratios, which were below 0.5 throughout the week as traders rushed to call options to speculate on higher prices down the road.

Bullish indicators include the low Dividend Yield Spread (2.73 vs. 2.63), the Odd Lot Short Ratio (45.92 vs. 54.97), the Public-Specialists Short Ratio (11.27 vs. 12.63) and strong short interest at both the NYSE and the NASDAQ despite a 1.2% decline at the NYSE and a 0.1% drop at the NASDAQ for the period ending 11/30/10. Bearish indicators include the very low Mutual Fund Liquid Asset Ratio (3.5% vs. 3.5%), which is near an all time low and the high Percentage of Bullish Investment Ad visors (56.2% vs. 55.4%). These Bearish indicators are confirmed at this time by the rising number of AAS Sells as noted in the AAS Distribution table above.

In general, the technical condition of the market continued to improve this past week as the Vortex Index remained in very bullish ground along with the MACD for all five of members of the AAS Active Traders Model.

On the surface, it looked like not much was going on last week but if you look under the hood; you will get a different story.

As noted above, on a closing basis the DJIA traded in a narrow range throughout the period while failing to record a new recovery high. However, four of the five major indexes that we follow not only recorded new recovery highs last week but a couple are at three-year highs. The Russell 2000 is at its highest level in three years when it closed on 12/28/07 at 771.76. So while the DJIA has lagged most of the major indexes, the market remains strong. This is reflected in the very bullish readings from the Vortex Index over the last couple of weeks and bodes well for the market going forward.

Finally, there was an across the board spurt in the financial stocks last week which saw the Financial Sector SPDR ETF (XLF) challenge the 15.68 area on Friday. The major negative at this juncture is the continuation of the Over Bought readings on all of the members of this model. This status, coupled with the fact that there has been a steady increase in the Percentage of Bullish Investment Advisors which has climbed from a bullish 29.4% on 09/03/10 to its present bearish 56.2% reading is reason for concern. A high level in this category is interpreted as a negative for the markets as it is a contrarian indicator.

Industry Groups: Of the 25 Sectors that we track, 5 are rated as Buy while 20 are regarded as Neutral. The previous week's totals were10-11-4. The following are the strongest and weakest groups for the period ending Thursday, 12/10/10. Strongest: Transports and Natural Resources. Weakest: Utilities and Real Estate.

Trading and Investing Performance Review

While more difficult than prior weeks my Day Trading activities continue to provide handsome returns in conjunction with the performance of both the AAS Model Equity Portfolio and the AAS Active Trades Model Portfolio. The Model Equity Portfolio remains allocated at 54% Cash so a weekly gain of 0.66% compares nicely to the weekly gain of 1.40% for the S & P 500 index.

While cautious, we remain encouraged that the performance of our actual trading activities and our model portfolios will continue to surpass the results of the benchmark’s against which Investment Professionals are measured. Currently, we are in the top quartile of all measured returns, Mutual Fund, Hedge Fund and Index and we see little to detract from the returns through year end.

Portfolio Review and Weekly Wrap Up 12-05-10

2010-12-05T07:32:00.000-08:00

Despite falling on both Monday and Tuesday (down about 0.7% from last Friday's close), stocks finished the week on a very strong note. The S&P 500 rallied 2.99% over the week, but by more than 4% from the lows set on Monday. The real surprise, however, came on Friday when despite what was some of the worst data that Wall Street has received in a while (a very weak employment report), stocks held in there.

On Friday, the Labor Department showed that the U.S. economy added fewer jobs than expected in November with the unemployment rate rising to the highest level since April at 9.8%. Non-farm payrolls rose 39,000 last month, well below the 150,000 jobs economists had been expecting. Private sector payrolls were up 50,000 workers, and manufacturing payrolls fell 13,000. The Street had been looking for a 160,000 job gain on the private number, and a 5,000 job decline for manufacturing. The unemployment rate rose from 9.6% to 9.8%.

Concerns over Sovereign debt in the Euro zone continued this week with the S&P placing both Portugal and Greece on CreditWatch Negative. Fears related to Portugal, and to a lesser extent Spain, were seen earlier this week, while concerns on Greece were sparked on Thursday. Shares were volatile during Tuesday's trading session as concerns related to Portugal weighed on the minds of investors. Remarks from President Obama, however, brought stocks into positive territory although they closed lower. Obama suggested that he would be willing to compromise with Republicans in regard to extending Bush's tax cuts.

This week the Federal Reserve issued details of the transactions conducted during the course of the 2008 to 2010 period, which were done in order to stabilize the financial markets during the crisis. Although numerous large institutions used a number of the Fed's tools during this period, Bank of America stuck out using the Primary Dealer Credit Facility more than 1,000 times in about nine months.

PIMCO's Bill Gross said that the Federal Reserve is unlikely to raise the ultra-low interest rates for several years as employment figures continue to disappoint. The manager of the world's largest bond fund at PIMCO said in an interview with Bloomberg Friday that “with the Fed on hold, the best segment for investors in the front end of the yield curve.’ The comments made by Gross followed the weak jobs report Friday from the Labor Department that show only 39,000 jobs were added last month, compared the economist consensus of 144,000.

The Housing sector gained several data points this week: S&P/Case Shiller for September declined 0.8% to 147.49 and pending home sales for October rose 10.4%, much better than the 1% decline economists had been expecting. Homebuilders as reflected by the ETF (XHB) rose nearly 8% this week.

Breadth finished Friday in positive territory, but volume was very thin. Advancing issues outpaced declining issues by a 17 to 11 ratio on the NYSE and by a 14 to 11 ratio on the NASDAQ. Trading volume was 83% of the rolling yearly average of volume as measured by the AAS Distribution analysis.

Crude futures soared to another two-year peak Friday, extending Oil’s winning streak to three straight sessions. The bolstering oil prices added to the ailing problems of the dollar, which made it easier for foreign-currency holders to scoop up the dollar-denominated commodity. Additional fuel for the Buy side came in the form of predictions for unseasonably cold weather across Europe and parts of the U.S..

Furthermore four major banks lifted their long-term estimates for oil prices this week with Goldman Sachs forecasting domestic crude futures to touch $100 a barrel next year. Against this backdrop, January-dated crude oil futures finished with a gain of $1.19, or 1.35%, at $89.19 per barrel – crude's highest settlement since Oct. 7, 2008. For the week, the front-month contract tacked on 6.5%, marking the best week-over-week gain since Nov. 5.

Additionally, Gold futures also edged higher Friday, also bolstered by the dollar's downturn. Furthermore, the disappointing non-farm payrolls report sparked concerns about the pace of the economic recovery, which translated into a boon for the "safe-haven" asset. By the close, February-dated gold futures advanced $16.90, or 1.2%, to end at $1,406.20 an ounce. For the week, the price of Gold added 3.6%.

Levels to Watch in Trading:

With the S & P 500 turning in its best performance since early November with a gain of 2.99% for the week, one might expect that the AAS Model portfolios were surpassed by this major index. Not so both the AAS Model Equity Portfolio and the AAS Active Traders portfolio turned in superior performance for the week. The AAS Model Equity Portfolio gained 2.38% for the period. But you must recognize that this model is only 50% invested and incurred no trades for the week. The AAS Active Traders Portfolio gained 3.54% for the period and was fully invested. It did incur a trade on Friday selling IGate Corporation (IGTE) at $20.08 and replacing it with a position in Volcano Corp. (VOLC) purchased at $27.69.

Each day of the past week found my mornings taken up with my Day Trading activities. For the week, I placed fourteen trades (14) with a 50% win and 50% loss ratio. Somewhat lower than my weekly average, but very profitable none the less.

The table above, along with the graphs and charts below, display the returns, holdings and trading statistics for the model portfolios through Friday, December 3, 2010. Remember, that some of these are hypothetical portfolios, and there is no assurance that future results will replicate the historical ones. However, we have run significant back tests using this approach and have compared them to the actual results we have produced with the original QMA Core portfolio methodology and the AAS systems.

Portfolio Review and Weekly Wrap UP November 27, 2010

2010-11-28T13:13:00.000-08:00

Portfolio Review:

Over the past week we were again blessed with stellar performance in both of the AAS Model Portfolios as well as on the personal front with my day trading account.

The table above, along with the graphs and charts below, display the returns, holdings and trading statistics for the model portfolios through Friday, November 26, 2010. Remember, that some of these are hypothetical portfolios, and there is no assurance that future results will replicate the historical ones. However, we have run significant back tests using this approach and have compared them to the actual results we have produced with the original QMA Core portfolio methodology and the AAS systems.

There were three trades which were consummated on Friday, November 19, 2010 and are detailed in the Holdings report and the Closed Transactions report below.

Closed Transactions:

Holdings:

Weekly Review:

While the Black Friday retail reports were mostly upbeat, worries about European sovereign debt and an intensified situation between North and South Korea were too much for the market to feel comfortable over the past week. Of the five members of the AAS Active Traders Model the Russell 2000 led the group for the week up 1.67 % followed by the NASDAQ up 1%. Both the Dow Jones Industrial Index and the S & P 500 turned in negative returns and only the Russell 2000 has regained a Buy recommendation as of Friday’s close.

Breadth was definitively negative while trading volume as we had expected averaged a weak 62.6% of its yearly rolling average. On Friday declining issues outnumbered advancing issues by a 2 to 1 ratio on the NYSE and by a 5 to 3 ratio on the NASDAQ. AAS Distribution analysis remains strong but over the past week these numbers have been declining on a daily basis.

Crude futures gave back some of their pre-holiday gains, as a stronger U.S. dollar weighed on the commodity. The growing concerns about European debt, including reports that Portugal and Spain may need bailout funds, bolstered the U.S. dollar, thus sapping Oil’s recent strength. January-dated crude oil futures slipped 40 cents, or 0.5%, to finish at $83.46 per barrel. For the week the contract added 1.8%.

Gold futures extended their losses to a second consecutive day on Friday, with profit taking and a rising U.S. dollar applying pressure to the precious metal. For the session, gold for December delivery fell $17.10, or 1.3%, to close at $1,357 an ounce. However, Gold still gained its way higher for the week, adding 0.3% to finish above support at its 10-week moving average.

Volatility was the name of the game over the past week, shortened as it was by the Thanksgiving Holiday and rocked with much negative news about European debt worries, Wall Street investigations and the Korean flare up dominating the headlines.

The AAS Active Traders Model remained relatively stable with only the Russell 2000 regaining a Buy recommendation with the strong performance that this index grouped turned in for the week gaining 1.67% for the period. The Over Sold and Over Bought readings remained the same as at the end of the previous week.

Levels to Watch in Trading:

Bullish indicators include the low Dividend Yield Spread (2.64 vs. 2.45), the Odd Lot Short Ratio (48.17 vs. 48.27), the Public-Specialists Short Ratio (11.87 vs. 10.78) and an up tick in short interest at both the NYSE (+0.9%) and the NASDAQ (+0.1%) for the period ending 11/15/10. Bearish indicators include the very low Mutual Fund Liquid Asset Ratio (3.5% vs. 3.4%), which is near an all time low and the Percentage of Bullish Investment Advisors (55.7%).

Refer to the Investment Indicators page of the most recent issue of your Alpha Advisor newsletter for further details.

Next week is going to be a busy week on the economic event front.

Monday: No reports to mention

Tuesday: ICSC Goldman Store Sales, Chicago PMI, Consumer Confidence and State Street Investor Confidence data to be released.

Wednesday: MBA Purchase applications, Challenger Job-Cut Report, ADP Employment Report and Construction Spending data to be made available.

Thursday: Employment Index, Jobless Claims and Pending Home Sales data to be released.

Friday: Employment Situation information available.

The past week while not a superb week for the markets was another good week for my trading programs.

Weekly Wrap up and Portfolio Review

2010-11-21T10:44:00.000-08:00

The markets are set up for a quite Thanksgiving week. With the domestic markets closed Thursday for the Thanksgiving Holiday and Friday as a shortened trading day, we are not expecting much in the way of trading activity. The economic calendar does not include a great deal to anticipate for the coming week.

While the broad markets turned in very lack luster performance last week, it was an extremely good week for me personally. But, if you have been following the AAS Model newsletter portfolios or the AAS Active Traders Portfolio since its introduction in August, you should already know that, and hopefully, be enjoying similar results.

This past week saw the AAS Asset Allocation levels reduced to 50% Invested and 50% Cash or Hedged. The AAS Model Portfolios were reduced accordingly. Additionally, the AAS Active Traders model turned decidedly Bearish with all five of the members currently in a Sell mode with mixed over bought / over sold readings. As mentioned on numerous occasions, we encourage you to focus on the Vortex Indicator which is included in this model. Currently, only the NASDAQ continues to hold a Sell status for the Vortex.

I would like to take a few moments of your time to explain a table below. The AAS Model Equity Portfolio is driven by the Major Market model, which remains Bullish with the reduced Asset Allocation levels in place. This portfolio was designed to be an intermediate term portfolio, tax efficient, and deliver annualized performance over long periods of time that would significantly out-perform the Standard and Poor’s 500 Index. Since its inception, it has accomplished this objective.

The AAS Active Traders Model was developed in response to subscriber requests for a more active investment approach without the use of the Major Market Model; for investors that wanted to remain in the market but trade around the volatility. Both of these portfolios along with the market models which drive them, are computer generated, systemic and extremely consistent and successful.

In June 2009, I began to personally trade Options on a short list of ETF’s and equities selected primarily from the Alpha Advisor Service master list. My trading is done with TD Ameritrade, and I use the trading platform which they offer to their clients, thinkorswim. In each trading session I will Buy to Open up to three positions and Close out the trades no latter than 3:45 PM each day. My overall win / loss experience has been very acceptable at 63% wins and 37% losses. The returns from my perspective are stellar. For my purposes, I limit my capital to this trading activity to no more than $75,000.00 and will invest no more than 20% of the capital in any one position. The profits are then rolled up into the AAS Active Traders portfolio and subsequently into the AAS Equity Model portfolio or longer term bonds and bank CD’s.

The table above, along with the graphs and charts below, display the returns, holdings and trading statistics for the model portfolios through this past Friday, November 19, 2010. Remember, that some of these are hypothetical portfolios, and there is no assurance that future results will replicate the historical ones. However, we have run significant back tests using this approach and have compared them to the actual results we have produced with the original QMA Core portfolio methodology and the AAS systems.

The five tables below were generated using the TD Ameritrade ThinkorSwim utility this past week. During the week I traded options on the following securities. Goldman Sachs (GS), Apple Computer, Inc. (AAPL), Google (GOOG), SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF (SPY), iShares Russell 2000 Index ETF (IWM).

This information is provided to assist you in verifying the accuracy of the statistics which we include for your information. The statistics on the AAS Model Equity Portfolio are available in the bi-weekly Alpha Advisor Service newsletter and the AAS Active Traders Portfolio is available through our blog site in the archived folder.

As we enter this Thanksgiving season, I am thankful for my wife and family and the gift’s with which God has given me. I have a great deal to be Thankful for. I hope you and yours enjoy the holiday as well.

The markets are set up for a quite Thanksgiving week. With the domestic markets closed Thursday for the Thanksgiving Holiday and Friday as a shortened trading day, we are not expecting much in the way of trading activity. The economic calendar does not include a great deal to anticipate for the coming week.

While the broad markets turned in very lack luster performance last week, it was an extremely good week for me personally. But, if you have been following the AAS Model newsletter portfolios or the AAS Active Traders Portfolio since its introduction in August, you should already know that, and hopefully, be enjoying similar results.

This past week saw the AAS Asset Allocation levels reduced to 50% Invested and 50% Cash or Hedged. The AAS Model Portfolios were reduced accordingly. Additionally, the AAS Active Traders model turned decidedly Bearish with all five of the members currently in a Sell mode with mixed over bought / over sold readings. As mentioned on numerous occasions, we encourage you to focus on the Vortex Indicator which is included in this model. Currently, only the NASDAQ continues to hold a Sell status for the Vortex.

I would like to take a few moments of your time to explain a table below. The AAS Model Equity Portfolio is driven by the Major Market model, which remains Bullish with the reduced Asset Allocation levels in place. This portfolio was designed to be an intermediate term portfolio, tax efficient, and deliver annualized performance over long periods of time that would significantly out-perform the Standard and Poor’s 500 Index. Since its inception, it has accomplished this objective.

The AAS Active Traders Model was developed in response to subscriber requests for a more active investment approach without the use of the Major Market Model; for investors that wanted to remain in the market but trade around the volatility. Both of these portfolios along with the market models which drive them, are computer generated, systemic and extremely consistent and successful.

In June 2009, I began to personally trade Options on a short list of ETF’s and equities selected primarily from the Alpha Advisor Service master list. My trading is done with TD Ameritrade, and I use the trading platform which they offer to their clients, thinkorswim. In each trading session I will Buy to Open up to three positions and Close out the trades no latter than 3:45 PM each day. My overall win / loss experience has been very acceptable at 63% wins and 37% losses. The returns from my perspective are stellar. For my purposes, I limit my capital to this trading activity to no more than $75,000.00 and will invest no more than 20% of the capital in any one position. The profits are then rolled up into the AAS Active Traders portfolio and subsequently into the AAS Equity Model portfolio or longer term bonds and bank CD’s.

The table above, along with the graphs and charts below, display the returns, holdings and trading statistics for the model portfolios through this past Friday, November 19, 2010. Remember, that some of these are hypothetical portfolios, and there is no assurance that future results will replicate the historical ones. However, we have run significant back tests using this approach and have compared them to the actual results we have produced with the original QMA Core portfolio methodology and the AAS systems.
The five tables below were generated using the TD Ameritrade ThinkorSwim utility this past week. During the week I traded options on the following securities. Goldman Sachs (GS), Apple Computer, Inc. (AAPL), Google (GOOG), SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF (SPY), iShares Russell 2000 Index ETF (IWM).
This information is provided to assist you in verifying the accuracy of the statistics which we include for your information. The statistics on the AAS Model Equity Portfolio are available in the bi-weekly Alpha Advisor Service newsletter and the AAS Active Traders Portfolio is available through our blog site in the archived folder.

As we enter this Thanksgiving season, I am thankful for my wife and family and the gift’s with which God has given me. I have a great deal to be Thankful for. I hope you and yours enjoy the holiday as well.

Model Changes Wednesday, November 17, 2010

2010-11-17T04:34:00.000-08:00

Both the AAS Major Market Model and the AAS Active Traders Model reflect changes following the sell off through Tuesday evening. The Major Market Model while remaining Bullish in status reflects a reduction in the Asset Allocation range to 50% Long and 50% Cash or Hedged.

The AAS Active Traders Model now has four or the five members in a Sell Status with only the S & P 500 remaining Bullish. Should we have a continuation of the trading patterns of Monday and Tuesday this member will undoubtedly turn to a Sell Status recommendation as well.

All of the major indexes have fallen through their 20 day moving average support as of Tuesdays close. Tests of their 50 day moving averages look very likely at this juncture. They are 1165 for the S&P 500, 10950 for the DJIA and 2424 for the NASDAQ, 689 for the Russell 2000 and 334 for the Value Line Geometric.

Wednesday may be on the slightly positive day, as it has typically been the turning point each week of late. However, anything on the positive side coming to the surface and fueling any rebound is likely to be short lived and followed by more correction.

What do Goldman Sachs and The Motley Fool know that you don't??

2010-11-13T13:41:00.000-08:00

Up 28.16% since being introduced on August 14, 2010 versus the S&P 500 Up 11.12%

Since introducing the Actively Traded Portfolio strategy on August 14, 2010, the S & P 500 Index has gained 11.12% closing Friday at 1,199.21. The Actively Traded Portfolio closed on August 14, 2010 with a value of $12,913.64 and this past Friday, November 12, 2010 the closing value was $16,549.73 gaining $3,636.09, up 28.16%. There have only been three trades in the portfolio since the date of its introduction, August 14, 2010 and a total of six trades since the beginning of this year.

It has not been a bad run, but as we have mentioned previously, this is no surprise to those of us who are familiar with the underlying system which drives this robust portfolio. The original article is still available for review at our blog site Alpha for the Independent Thinker. Take a look at the August 14, 2010 Weekly Wrap up article.

This past week, we became aware of a new product introduction by the Motley Fool and a group of Hedge Fund Managers. The product is basically a do-it-yourself Hedge Fund for those who are interested in a Long / Short Equity Strategy. To participate, an applicant needed to have a brokerage account with a cash balance of $65,000.00 with the ability to short Stocks and use Margin. In addition, each participant needed to pay an entrance fee of $3,500.00. I am not sure about the reoccurring fees, but I am confident that there are some. The offering was fully subscribed and closed to new participants.

In return, the participant is to receive the initial portfolio allocation and timely email notifications or web site postings of all future trades. The participant is responsible for their own trade execution.

If that is not sufficient to perk your interest, MarketWatch on Wednesday, November 10, 2010 featured an article by Alistar Barr and Sam Mamudi on “Hedged Mutual Funds.” It appears that Goldman Sacks, among others, are now recommending that investors add these newly created mutual funds to their portfolios.

Neither one is a bad idea in moderation, but I doubt seriously that the results will be any where close to those of the AAS Active Traders Portfolio.

Every once in a while we like to compare our models to a larger universe of mutual funds or fund category returns to keep ourselves focused on what we do best. While a thirteen stock portfolio would not qualify as a mutual fund, we continue to believe that an individual investor can significantly improve their personal performance with such an approach.

The following two inserts were taken from the Wall Street Journal web site and represent a fair background for comparison.

We like the way that the year-to-date returns of the AAS Actively Traded Portfolio compare to the returns listed in the following two inserts.

The graphs and charts below display the returns, holdings and trading statistics for the model portfolio through this past Friday, November 12, 2010. Remember, that this is a hypothetical portfolio and, there is no assurance that future results will replicate the historical ones. However, we have run significant back tests using this approach and have compared them to the actual results we have produced with the original QMA Core portfolio methodology and the AAS systems.

We have received a fair number of inquiries since we began to discuss this strategy, and we believe that we must reiterate that this approach is not for everyone and not for 100% of the investment capital of those who choose to follow it in the future. We suggest that no more than 20% of your investment pyramid be invested using this approach. There is a tutorial on our approach which is available for review. Please inquire if interested in viewing it.

We are currently in the middle earnings season and a similar period for the Investment Management Companies which run the mutual funds you own personally or are incorporated in the 401K plans in which \ you participate. Keep your eye on those returns and compare them to this data. Ask yourself, “Who is responsible for your future--you or the management companies who continue to underperform and overcharge?”

Up 27.52% since being introduced on August 14, 2010 versus the S & P 500 Up 13.58%

2010-11-11T11:10:00.000-08:00

Since introducing the Actively Traded Portfolio strategy on August 14, 2010, the S & P 500 Index has gained 13.58% closing Friday at 1,225.85. The Actively Traded Portfolio closed on August 14, 2010 with a value of $12,913.64 and this past Friday, November 5, 2010 the closing value was $16,467.74 gaining $3,554.10 up 27.52%. There have only been three trades in the portfolio since the date of its introduction, August 14, 2010 and a total of six trades since the beginning of this year.

It has not been a bad run, but as we have mentioned previously, this is no surprise to those of us who are familiar with the underlying system which drives this robust portfolio. The original article is still available for review at our blog site Alpha for the Independent Thinker. Take a look at the August 14, 2010 Weekly Wrap up article.

Every once in a while we like to compare our models to a larger universe of mutual funds or fund category returns to keep ourselves focused on what we do best. While a thirteen stock portfolio would not qualify as a mutual fund we continue to believe that an individual investor can significantly improve their personal performance with such an approach.

The following two inserts were taken from the Wall Street Journal web site and represent a fair background for comparison.

The graphs and charts above display the returns, holdings and trading statistics for this model portfolio through this past Friday, November 5, 2010. Remember, that this is a hypothetical portfolio and, there is no assurance that future results will replicate the historical ones. However, we have run significant back tests using this approach and have compared them to the actual results we have produced with the original QMA Core portfolio methodology and the AAS systems.

We have received a fair number of inquiries since we began to discuss this strategy, and we believe that we must reiterate that this approach is not for everyone and not for 100% of the investment capital of those who choose to follow it in the future. We suggest that no more than 20% of your investment pyramid be invested using this approach. There is a tutorial on our approach which is available for review. Please inquire if interested in viewing it.

We are currently in the middle earnings season and a similar period for the Investment Management Companies which run the mutual funds you own personally or are incorporated in the 401K plans you participate in. Keep your eye on those returns and compare them to this data. Ask yourself, “Who is responsible for your future--you or the management companies who continue to underperform and overcharge?”

Weely Wrap UP November 6, 2010

2010-11-07T11:50:00.000-08:00

The past week’s trading activity was fueled by the mid-term election results and the news released at the conclusion of the Federal Reserves monthly meeting that took the year-to-date returns of the five major indices in the AAS Traders model to their yearly highs. More importantly, to those who remained invested through the 2008 crash, the NASDAQ reached a level equal to its highest level in September 2008. The remaining four members are within a few points of surpassing their September ‘08 levels as well.

The markets began to turn in earnest with stronger momentum on Wednesday afternoon around 2:45 PM as traders digested the news of the FOMC minutes and the potential impact of the additional QE2 activities on the part of the Fed. With the exception of the trade between 2:45 PM Wednesday afternoon and 11:00 AM Thursday morning, which represents about 90% of the weeks gain, it was a relatively benign week in the markets.

The coming week should open strongly on Monday as the Bulls remain in control. There is an abundance of cash available from those who moved to the sidelines anticipating a "sell the news" reaction to last week's events. After 26 consecutive weeks of net outflows from domestic equity funds, one has to wonder when the retail investor will finally get bold enough to re-enter the markets and add to the support of the advance.

While the media has been focusing upon election results and FOMC-QE2 activities, there is another force quietly working behind the scenes whose actions serve to move the markets upward with higher trading volume. October 31 is the closing date for the vast majority of mutual funds, while the performance returns typically are calculated through the December year-end-date. This strategic anomaly gives funds the opportunity to adjust for under performance as needed. Additionally, at this time of the year, we experience the normal rebalancing activities of mutual fund portfolio managers and hedge fund managers plus the effects of those trying to "catch up" to a hot market, i.e., one that has performed well during the first 10 months of the year. Historically, the combined effect is to pump money into the high flyers in the final two months hoping to catch the coattails of the winners and ride them into the New Year.

With the five major indices included in the AAS Active Trader’s models at their year-to-date highs, many investors are concerned about how much more room remains for the markets to run. If history repeats itself, we might expect some very strong performance for the remaining months; much like the returns experienced in ‘09, ‘06 and ‘03. In those years, the closing month’s performance provided in excess of 55% returns carrying the markets to strong double digit returns. Remember, that winners win. Follow those stock’s, ETF’s and funds with superior Alpha rating scores and work hard the Top Ten listings as well as the AAS New Buys for long ideas.

At this time, two of the three model portfolios in our newsletter are significantly outperforming the S & P 500 benchmark index.

For the week, market breadth finished on the positive side with Advancing issues outnumbering declining issues by a 17 to 12 ratio on the NYSE and by a 7 to 6 ratio on the NASDAQ. Trading volume increased significantly up to 93% of its rolling yearly average. Also this past week, along with this increase in volume, the number of New Highs on both the NYSE and the NASDAQ has increased by almost two fold. The number of the AAS Buy-Sell-Neutral ratings continues to remain very strong in confirmation of the increase in New Highs.

As noted on the Investment Indicators page of today’s newsletter, Bullish indicators of note are the Dividend Yield Spread (2.46 vs. 2.37), the Odd Lot Short Ratio (46.24 vs. 54.13) and the Public-Specialists Short Ratio (9.68 vs. 9.90). These indicators, among others, are supportive of those suggesting a continuation of last week’s rally. The only bearish indicator of concern at this time is the very low Mutual Fund Liquid Asset Ratio (3.5% vs. 3.4%), which is near an all time low.

Crude futures gained a little bit of ground Friday despite the generally ambivalent mood on Wall Street. Traders took their cues from the day's better-than-expected payrolls report, which stoked expectations for an uptick in energy demand. A modest rise by the beaten-down U.S. dollar kept a lid on crude's positive momentum. But nevertheless, oil futures settled at a two-year peak today. Crude oil for December delivery gained 36 cents, or 0.4%, to end at $86.85 per barrel, its best finish since October 2008. For the week, Oil added an impressive 6.7%.

Gold futures had no trouble capitalizing on traders' indecisive attitude. As the stock market floundered and crude battled out a fractional gain, gold cruised its way to a fresh record high. By the close, gold for December delivery was up $14.60, or 1.1%, to finish at a new all-time peak of $1,397.70 per ounce. On a weekly basis, the popular inflationary hedge rose 3%. Last week, we mentioned a newly introduced ETF, the Physical Precious Metal Basket Shares (GLTR), which itself gained 5.27% for the week.

Levels to Watch in Trading:

Both, the AAS Major Market Model and the AAS Active Traders Model, are Bullish at this time. The Asset Allocation range was reduced recently to 75% Invested and 25% Cash or Hedged.

While all six of the technical indictors which comprise the Active Traders Model are Bullish, they have also maintained the Over Bought status of the past several months. Last week, the Vortex indicator began to suggest a continued flattening of the trading range. This indicator began to move divergently on Wednesday and now is slightly more encouraging.

Here is a brief list of some of the key events this week.

Monday - There are no major economic reports scheduled for Monday.

Tuesday – NFIB Small Business Optimism Index along with the ICSC-Goldman Store Sales data is to be released.

Wednesday – MBA Purchase Applications, International Trade and Jobless Claims reports are due out.

Thursday – U.S Holiday: Veterans Day Stock and Futures Markets are closed.

Friday - The Reuter’s/University of Michigan will deliver its reading on consumer sentiment.

Given that most of the gain in the past week came the previously mentioned Wednesday – Thursday gap, and the upcoming mid-week holiday we encourage caution on the part of Traders. Any news will move this market with sudden and extreme volatility.

Weekly Wrap UP! - October 30, 2010

2010-10-30T12:18:00.000-07:00

Following a string of three consecutive strong weeks, stocks took a breather last week ending the month of October with a week of flat action across the five indices in the AAS Active Trades Model. All of the members of this group, with the exception of the NASDAQ, turned in negative gains for the week. While remaining Bullish and holding to the current Buy ratings, there is a body of significantly growing technical evidence that conditions are changing rapidly.

Investors stood on the sidelines for most of the week in anticipation of next week’s midterm elections and Fed meeting. On Friday, we saw the first read of Q3 GDP data which came in as expected at 2%, sluggish enough to allow the Fed to justify its QE2 activities, but good enough to suggest that there is no threat of a double-dip recession. Trading velocity was very slow, and markets remained within tight trading ranges.

Breadth stayed positive during the sleepy week. On Friday, advancing issues beat declining issues by a 16 to 11 ratio on the NYSE and by a 14 to 11 ratio on the NASDAQ. Remaining weak, Trading Volume averaged 76.5% of the rolling one year average. Distribution, as measured by the AAS Distribution analysis, remains Bullish and well above the averages.

Crude futures ended the week with a thud even as Oil turned in a decent monthly advance. Crude oil for December delivery ended the day on a deficit of 75 cents, or 0.9%, at $81.43 per barrel. For the week, crude shed 0.3%; for the month, oil futures added 1.8%.

On the other hand, gold futures enjoyed a boost Friday as traders rediscovered their appetite for the popular safe-haven asset. Uneven reports on the domestic economy, along with anxiety ahead of next week's Fed decision, helped gold for December delivery add $15.10, or 1.1%, to close at $1,357.60 per ounce. On a weekly basis, gold rose 2.5%, and the precious metal ended October on a gain of 3.7%. The recently introduced ETF “GLTR” Physical Precious Metal Basket Shares is worth keeping your eye on should you be interested in joining those driving the price of precious metals to all time highs. The fact that it holds four commodities, Gold, Silver, Platinum and Palladium, minimizes the need to not only be right on market timing but also be right on which commodities to own. This might be a win–win situation for most investors.

The technical conditions among the major indexes continue to point to a correction. Next week’s driving force is going to be midterm election results and news events which make it difficult to predict the direction of the market.

The following chart of the Dow Jones Industrial Index has been the typical of the weekly action for the past several weeks. Wednesday has been the turning point for market direction week after week since Mid September. The coming week should be no different.

QE2 at a size of 500 billion dollars and the Republicans gaining control of the House have been talked about for so long and so much, the risk of a sell off is high.

We normally will use the Standard and Poor’s 500 when setting up the charts below, but this week to remain consistent, we are using the Dow Jones 30 to line up with the chart above.

Using the Vortex indicator shown below in the lower right hand corner as a precursor, you can visualize how the Dow is setting up much as it did in early August of this year. The cross over occurred on August 6th and we saw the Dow give back 6% before stabilizing. The coming week may be a repeat of this action.

Bullish indicators include the low Dividend Yield Spread (2.37 vs. 2.32), the Odd Lot Short Ratio (54.13 vs. 55.94), the Public-Specialists Short Ratio (9.80 vs. 10.10) and high levels of short interest at both the NYSE and the NASDAQ.
Bearish indicators in addition to the very low Mutual Fund Liquid Asset Ratio (3.5% vs. 3.4%), which is near an all time low, are Bearish readings for both the VIX and VIN indicators along with a Bearish reading for the CBOE Equity Put/Call ratio.

Levels to Watch in Trading:

As the Active Traders Model continues to reflect we remain Bullish with a continuing Buy rating. But recently the Asset Allocation range has been decreased to 75% Long and 25% Cash or Hedged. This occurred most recently on October 20, 2010 and was reported in that edition of the newsletter.

But as mentioned previously we must reiterate that we are continuing to see evidence of caution entering the marketplace…

•The National Association of Active Investment Managers' (NAAIM) weekly survey indicates that money managers have significantly reduced their exposure to the equity market since early October.

•Option activity continues to suggest that hedge funds are in the early innings of moving back into equities. A Bank of America/Merrill Lynch hedge fund report suggested that as of Oct. 20, long/short hedge funds had net long exposure of 21%, far below the historical net long range of 35%-40%.

•Since early October, the 10-day, all-equity buy-to-open put/call volume ratio on the Chicago Board Options Exchange and International Securities Exchange has risen, indicating relatively more buy-to-open put volume on individual equities.

•The public remains wary, as last week was the 25th consecutive week of outflows from domestic equity funds.

•Various headlines suggest caution, including a piece in the Journal this past Thursday entitled, "Doubts Surround Rally's Vigor."

We urge caution on the part of investors as we could see some profit taking on Monday and Tuesday as traders try to go flat ahead of the news. There are just going to be too many uncertainties next week (terror risk and Friday jobs report in addition to the election and Fed meeting).

Of the 25 Industrial Sector Groups that we track, 16 are rated Buy while 5 are rated Sell and 4 rated Neutral. The previous week's totals were also 13-10-3. The following are the strongest and weakest groups for the period ending Thursday, 10/28/10. Strongest: Basic Materials and Software. Weakest: Financials and Financial Services.

Here is a brief list of some of the key events for this week.

Monday - The Commerce Department will report on Personal Income and Spending, Construction Spending in September, while the Institute for Supply Management (ISM) will issue its October Manufacturing Index.

Tuesday - There are no major economic reports scheduled for Tuesday, which is also Election Day.

Wednesday - The news will center on the current decisions of the Federal Open Market Committee. Also, we will get the ISM Services Index for October plus reports on Auto Sales in October and Factory Orders in September, along with the usual weekly report on U.S. Petroleum Supplies. ADP will weigh in with employment numbers in the private sector.

Thursday - The weekly Initial Jobless claims report is to be released.

Friday – Consumer Credit data along with Employment Situation figures for October will be released.

Suffice it to say, that there will not be much room for day dreaming or sleep walking in the coming week. Be careful, measure twice and cut once.

Up 24.3% since being introduced on August 14, 2010 versus the S & P 500 Up 9.6%

2010-10-23T11:02:00.000-07:00

Since introducing the Actively Traded Portfolio strategy on August 14, 2010, the S & P 500 Index has gained 9.62% closing Friday at 1,183.08. The Actively Traded Portfolio closed on the same date with a value of $12,913.64 and this past Friday, October 22, 2010 the closing value was $16,049.2 gaining $3,135.56 up 24.28%. There have only been two trades in the portfolio since the date of its introduction.

On Friday, both CGI Group, Inc. (GIB) and Red Hat, Inc. (RHT) were sold and replaced with positions in Chipotle Mexican Grill, Inc. (CMG) along with Baidu.com, Inc. (BIDU).

It has not been a bad run, but as we have mentioned previously, this is no surprise to those of us who are familiar with the underlying system which drives this robust portfolio. The original article is still available for review on this blog site Alpha for the Independent Thinker. Take a look at the August 14, 2010 Weekly Wrap up article.

The graphs and charts above display the returns, holdings and trading statistics for this model portfolio through this past Friday, October 22, 2010. Remember, that this is a hypothetical portfolio and, there is no assurance that future results will replicate the historical ones. However, we have run significant back tests using this approach and have compared them to the actual results we have produced with the original QMA Core portfolio methodology and the AAS systems.

We have received a fair number of inquiries since we began to discuss this strategy, and we believe that we must reiterate that this approach is not for everyone and not for 100% of the investment capital of those who choose to follow it in the future. We suggest that no more than 20% of your investment pyramid be invested using this approach. There is a tutorial on our approach which is available for review. Please inquire if interested in viewing it.

We are currently in the middle earnings season and a similar period for the Investment Management Companies which run the mutual funds you own personally or are incorporated in the 401K plans you participate in. Keep your eye on those returns and compare them to this data. Ask yourself, “Who is responsible for your future--you or the management companies who continue to underperform and overcharge?”

Tuesday, October 5, 2010

2010-10-05T04:19:00.000-07:00

Bullish momentum is weakening. Volume has contracted over the past several sessions. Stocks remain overbought. AAS Asset Allocation reduced to 75% Long - 25% Cash or Hedged. Expect more pullbacks in the very near term. VIX on the rise, AAS Technical’s weakening our advice is that you remain cautious at this time.

We will be watching the indices for opportunities t Buy Puts today. Focusing on the more active name, QQQQ, DIA, IWM and SPY.

Weekly Wrap UP October 3, 2010

2010-10-03T11:37:00.000-07:00

The September rally is over, but it was sure fun while it lasted. After four weeks of impressive gains, stocks took a breather last week as the DJIA, NASDAQ and the S & P 500 ended the period with minor losses. Both, the Valueline Geometric and the Russell 2000 closed up for the week with respectable gains.

Monday, the DJIA started the week with a 48.22 point (-0.4%) loss, which was just the fifth losing session in September. Traders bought the dips throughout the week as the DJIA saw triple digit intra-day swings on Tuesday and Thursday. Despite several disappointing economic reports, traders kept a bullish outlook throughout the week. For the period, the Dow lost 30 points (-0.3%) to close at 10829, snapping its four week win streak.

All five members of the AAS Traders Model had mixed weekly performance as measured by the weekly change. They all retain the AAS Buy rating, but the markets continue to retain the Over Bought status of recent weeks.

The market internals were decisively positive. Advancing issues led declining issues by a 2 to 1 ratio on the NYSE and by a 14 to 11 ratio on the NASDAQ. Volume was low averaging 77% of the rolling yearly average for the week. The AAS Buy – Sell recommendations remain above acceptable levels confirming the Bullish status of the AAS Major Market Model.

Crude futures continued to climb Friday, with Oil catching a boost from a round of relatively well-received economic data. The solid reports translated to softness in the U.S. dollar, making crude oil more attractive to traders holding foreign currencies. Crude oil for November delivery tacked on $1.61, or 2%, to finish at $81.58 per barrel -- a seven-week high. For the week, crude rallied an impressive 6.6%.

Meanwhile, gold futures resumed their quest for record highs. Traders took their cues from the dollars six-month low against the Euro, as well as New York Fed President William Dudley's observation that additional quantitative easing will likely be necessary. As a result, gold peaked at an all-time high of $1,322 a Troy ounce on an intraday basis before settling on a gain of $8.20, or 0.6%, at $1,317.80 per ounce. On a weekly basis, gold gained 1.5%.

Despite Friday’s positive close, three of the five major indexes tracked by the AAS Traders Model finished the week in the red. As mentioned earlier this was the first loss in five weeks. Bullish momentum is clearly weakening and the S&P 500 still faces resistance at 1150. In addition, the negative divergences mentioned in previous postings are still in place. It is not all bearish, however. There are quite a few, if not more, bullish technical conditions. There was no follow-through to Thursday’s downside reversal. The short term uptrend is not broken as the major indexes stayed above their 50-day exponential moving averages. The DJIA got its “golden cross” today as its 50-day moving average crossed above its 200-day moving average. There are many remaining layers of support should stocks pull back, therefore, at this time the downside maybe limited.

The most exciting thing facing investors now is that the fourth quarter starts. Research shows that the fourth quarter has been a great time to be in the market. It's overwhelmingly more bullish than any of the previous quarters. Focusing on the last 20 years, the fourth quarter has averaged a gain of almost 5% and it has been positive 80% of the time.

While the AAS Major Market Model remains Bullish and the AAS Asset Allocation recommendation is at 87.5% invested 12.5% Cash or Hedged caution remains the thought of the day. Let us be vigilant and cautious as earning season unfolds. There will be many surprises to interpret and much news to evaluate as we come into the close of this trading year. While September was robust and much fun for those who were both astute enough to pick the right stocks and nimble enough to avoid the down swings, we must remember that the year-to-date returns through August 31, 2010 were all negative. Let us not lose sight of the risks in the market.

Next week is all about the unofficial start of the earnings season. Expect more volatility along with sideways moves like the ones we saw this past week.

Monday - The Commerce Department will report on August factory orders on Monday. Also, the National Association of Realtors will release pending home sales numbers for August.

Tuesday - The Institute for Supply Management will throw a spotlight on nonmanufacturing activity when it releases its services index for September. The ICSC-Goldman Store Sales is due to be released.

Wednesday – The EIA weekly report on U.S. petroleum supplies is due out. Most importantly the ADP Employment Report and the Challenger Job-Cut report will set the tone for the market.

Thursday - The Labor Department will release the weekly new jobless claims figures, while the Federal Reserve will report on consumer credit use in August. Additional information on Chain Store Sales and the EIA Natural Gas Report will be made available.

Friday - Reports on nonfarm payrolls and the unemployment rate for September will arrive on Friday along with data on Wholesale Trade.

Levels to Watch in Trading:

Up 18.5% since being introduced on August 14, 2010 versus the S & P 500 Up 6.19%

2010-10-02T14:26:00.000-07:00

Since introducing the Actively Traded Portfolio strategy on August 14, 2010, the S & P 500 Index has gained 6.19% closing Friday at 1,146.24, having increased 69.99 points in value. The Actively Traded Portfolio closed on the same date with a value of $12,913.64 and this past Friday, October 1, 2010 the closing value was $15,306.95 gaining $2,393.10 up 18.53%. There have been no trades in the portfolio since the date of its introduction. Not a bad run, but as we have mentioned previously, this is no surprise to those of us who are familiar with the underlying system which drives this robust portfolio. The original article is still available for review at our blog site Alpha for the Independent Thinker. Take a look at the August 14, 2010 Weekly Wrap up article.

Today, Rocky White, Senior Quantitative Analyst at Schaeffer’s Investment Research wrote an interesting observation. “September ended last week and it was a pleasant surprise this year. It's known to be a rough spot for the market, but this year the Dow Jones Industrial Average gained 7.7% during the month. That puts it at the top of the table below showing the best September Dow returns since 1950. The last time the Dow had a better September return was 1939.”

While interesting, we thought to take a look at the major indices for the month of September and compare their change in price (Gain) as compared to what might have been achieved with the AAS Actively Traded Portfolio strategy. The Actively Traded Portfolio did better than all of the indices in the group listed below and 2.1x’s better than the Dow Jones Industrial Average for the period. How did your portfolio do, we would like to hear from you!!

The graphs and charts below display the returns, holdings and trading statistics for this model portfolio through this past Friday, October 1, 2010. Remember, that this is a hypothetical portfolio and, there is no assurance that future results will replicate the historical ones. However, we have run significant back tests using this approach and have compared them to the actual results we have produced with the original QMA Core portfolio methodology and the AAS systems.

We recently took some time to prepare thirty-two groups of stocks from various economic sectors. Each group is made up of companies which operate within the same industrial group and are traded on a domestic stock exchange. Our intent is to aid readers in gaining comfort in the application of this approach and the potential benefits which might be gained by taking the time and effort to implement it within their own investment portfolios.

Each group report was run using the identical portfolio system and buy and sell rules which runs the AAS Actively Traded Portfolio (QMA-CORE) program, which we have been reporting on now for the past seven weeks.

We have received a fair number of inquiries since we began to discuss this strategy, and we believe that we must reiterate that this approach is not for everyone and not for 100% of the investment capital of those who choose to follow it in the future. We suggest that no more than 20% of your investment pyramid be invested using this approach. There is a tutorial on our approach which is available for review. Please inquire if interested in viewing it.

In a few short weeks, we will be in the middle of the reporting season for the Investment Management Companies which run the mutual funds you own personally or are incorporated in the 401K plans you participate in. Keep your eye on those returns and compare them to this data. Ask yourself, “Who is responsible for your future--you or the

Up 12.73% since being introduced on August 14, 2010

2010-09-20T07:17:00.000-07:00

Since introducing the Actively Traded Portfolio on August 14, 2010, the S & P 500 Index has gained 4.3% closing Friday at 1,125.59, having increased 46.34 points in value. The Actively Traded Portfolio closed on the same date with a value of $12,913.64 and this past Friday, the closing value was $14.557.54 gaining $1,643.90 up 12.73%. There have been no trades in the portfolio since the date of its introduction. Not a bad run, but as we have mentioned previously, this is no surprise to those of us who are familiar with the underlying system which drives this robust portfolio.

We have received a fair number of inquiries since we began to discuss this strategy, and we believe that we must reiterate that this approach is not for everyone and not for 100% of the investment capital of those who choose to follow it in the future. We suggest that no more than 20% of your investment pyramid be invested using this approach. There is a tutorial on our approach which is available for review. Please inquire if interested in viewing it.

The graphs and charts below display the returns, holdings and trading statistics for this model portfolio through this past Friday, September 17, 2010. Remember, that this is a hypothetical portfolio and, there is no assurance that future results will replicate the historical ones. However, we have run significant back tests using this approach and have compared them to the actual results we have produced with the original QMA Core portfolio methodology and the AAS systems.

This past week, we took some time to prepare thirty-two groups of stocks from various economic sectors. Each group is made up of actively traded securities which operate within the same industrial group and are traded on a domestic stock exchange. Our intent is to aid readers in gaining comfort in the application of this approach and the potential benefits which might be gained by taking the time and effort to implement it within their own investment portfolios.

Each group report was run using the identical portfolio system and buy and sell rules which runs the QMA-CORE program, which we have been reporting on now for the past five weeks.

In a few short weeks, we will be in the middle of the reporting season for the Investment Management Companies which run the mutual funds you own personally or are incorporated in the 401K plans you participate in. Keep your eye on those returns and compare them to this data. Ask yourself, “Who is responsible for your future--you or the management companies who continue to underperform and overcharge?”

Next week will be a short week for us at Alpha Advisor Service. The Alpha Advisor newsletter will be published as normal. However, there will be no blog posting or email for the weekend of September 24, 2010. Regular service will return the weekend of October 2, 2010.

Weekly Wrap Up September 18, 2010

2010-09-19T07:51:00.001-07:00

The market got off to a good start last Monday as the financial stocks led the way for what turned out to be the best day of the trading week. The DJIA gained 81.36 points (+0.82%) on Monday as the big banks, Morgan (JPM) and Bank of America (BAC), posted better than 3% gains. The week could have ended there and not much would have been lost. The remaining trading sessions combined added an additional 68.34 points to the Dow or about (+0.6%), but with much volatility and whip sawing occurring.

All five members of the AAS Traders Model had modest weekly performance as measured by the weekly change. They all retain the AAS Buy, rating but the markets continue to retain the Over Bought status of recent weeks.

Both, the AAS Major Market Model and the AAS Traders Model, continue to hold their Bullish recommendations. All three components of the AAS Major Market model are now Bullish as the Technical component turned Bullish as of Fridays close. The recommended Asset Allocation level was increased to 87.5% Invested and 12.5% Cash or Hedged on Friday as well.

In the AAS Model Equity portfolio, there were two trades. Caseys General Stores (CASY) and Cleveland Cliffs (CLF) were sold. The sales were triggered by the Trailing Stop Loss rule.

The positions were immediately filled by Chipotle Mexican Grill (CMG) and Isilon Systems (ISLN). All position allocations will be increased on Monday September 20th to the recommended levels in all three of the model portfolios.

Breadth was in positive territory for most of the week on the NYSE and the NASDAQ. Advancing Issues outpaced Declining Issues for three of the five market days with the Put/Call ratio dropping down below 1 for most of the week.

Volume expanded late in the week mainly due to the quadruple witching which occurred on Friday. Volume averaged 76% of the yearly rolling average, still weak by most standards. Distribution as measured by AAS is still well above the average levels and confirming the strengthening status of the markets.

We can expect some profit taking and consolidation in the coming weeks since the majors each have significant resistance levels to overcome. Can the major indexes break out of the trading range next week? Most reasonably, we will see a continuation of the current tug of war between the bulls and bears with the Federal Reserve Open Market Committee rate decision due on Tuesday. Traders will be looking for any indication of a easing from the Fed. Any sign of an this occuring could finally push stocks above their trading ranges. But expect pullbacks should such news be missing from the Fed’s policy statement.

Bullish indicators include the low Dividend Yield Spread (2.37 vs. 2.27), the Percentage of Bullish Investment Advisors, which rose to 36.7% from 33.3%, and the Odd Lot Short Ratio, which was unchanged at 35.49.

The technical condition of the market improved last week as the Momentum Index, Vortex and Wilders RSI all remained very strong while the Strength indicators showed considerable improvement as well.

While the near term outlook remains positive, there are several negatives which are developing on the horizon. The lack of volume at both the NYSE and the NASDAQ is not conducive to a significant rally. Some are beginning to discuss the theory that we may have experienced a permanent shift in practice since the March ‘09 lows. We are not sure at this time, but Volume or the lack of Volume is a continuing worry. However, if the S&P 500 can break above the much heralded resistance area around 1130-1133, a strong move through mid-October should develop.

Crude futures succumbed to a fourth straight daily drop as Enbridge restarted operations at its workhorse North American oil pipeline. The pipeline's resurrection effectively eliminated the closest thing oil futures had to a bullish catalyst, giving traders zero motivation to buy ahead of the weekend. With Oil finding no support from the day's lackluster economic data, crude oil for October delivery settled on a loss of 91 cents, or 1.2%, at $73.66 per barrel. For the week, the contract gave up 3.6%.

Gold continued to flex some serious muscle. A dose of tame inflationary data prompted speculation that policymakers could resort to additional quantitative easing, which could translate to weakness in the U.S. dollar. As a result, December-dated gold tacked on $3.70, or 0.3%, to end at $1,277.50 an ounce, yet another record high for the precious metal. On an intra-day basis, gold topped out at $1,284.40 per ounce. For the week, gold gained 2.5%.
Levels to Watch in Trading:

Of the 26 Sector Groups that we track, 16 are rated as Buy while 0 are regarded as Sell and 10 are rated Neutral. The prior week's totals were 15-10-1. Once again this shift is a major strengthening signal in and of itself. The following are the strongest and weakest groups for the period ending 09/10/10. Strongest: Software and Basic Materials. Weakest: Financial Services and Semiconductors.

The coming week will most likely be another slow week as we wait for the next deluge of earnings reports in October. Of note is the FOMC meeting this week which fuels speculation on the future direction of interest rates. The following is a brief list of some of the key events this week.

Monday - The National Association of Home Builders will release its September housing market index.

Tuesday - The Commerce Department will release August data on housing starts and building permits before the market opens. The Federal Open Market Committee will weigh in shortly after 2 p.m. with its decision on interest rates.

Wednesday - The weekly report on U.S. petroleum supplies is to be released.

Thursday - The report on new jobless claims will be available early in the day. Later, data on existing homes sales in August is scheduled to be released and the Conference Board will unveil its leading indicators index for August.

Friday – Data covering Durable goods orders for August and new homes sales for August are to be released on Friday.

AAS Active Traders model Portfolio up 42.74% Year-to-date. Awake and smell the Roses!!

2010-09-11T12:14:00.001-07:00

AAS Active Traders model Portfolio up 42.74% Year-to-date. Awake and smell the Roses!!

Last week, the recently introduced Actively Traded Portfolio outperformed the general market recovery by a very significant margin. The portfolios yearly gain was enhanced by 2.09% for the week to a Year-to-date gain of 42.74% up from 40.65% at the end of the prior week. There were no trades in the portfolio during the week, nor were there any additions to the current positions which were reported last week.

On August 14, 2010 we introduced the AAS Actively Traded Portfolio model which was designed to compliment the AAS Dynamic Portfolio model that has been featured for years in our newsletter. There are a few differences between the two approaches, but the primary one is the AAS Dynamic Equity Portfolio model utilizes the Buy and Sell Signals of our Major Market Model, while the Actively Traded Portfolio does not. As you know, the existing portfolio will go to Cash or Short alternatives when a Sell Signal is generated.

The Actively Traded Portfolio will ride through the volatility of the markets relying upon its internal Buy and Sell, Stop Loss and Capital Preservation rules to recognize deterioting conditions in the portfolio, jettisoning the declining stocks and then replacing them with new selections.

The Buy rules are relatively simple. You Buy if the closing price is greater than the short term moving average and the short term moving average is greater than the long term moving average. Sell if the short term moving average is less than the long term moving average. Use a Trailing Stop loss rule which protects 80% of the base cost of each security.

By utilizing the Buy rule and an underlying list of securities which could range between 50 and 100 names, this selection process will surface an excess number of eligible alternatives at any point in time. To reduce the list to a manageable number, we devised a ranking test that utilizes the AAS Adjusted Rate of Return calculation to determine the ranking top to bottom of the eligible equities. An alternative ranking factor is used in the event of ties. Here, the value of the MACD Oscillator or other similar indicator, might be used. Once the thirteen equities are identified, equal dollar sized positions are then created. When a Sell recommendation is generated for a security, it is sold and replaced with another suitable equity.

We started with a $10,000.00 portfolio for our purposes, but with on line brokerage services and all-in-one price trading becoming more acceptable, this approach would work with most any starting base. We use average pricing which is calculated by averaging the days High and Low prices. All trades and pricing calculations are done on the day after the trade signal is generated. Commissions have been included in the calculations.

The graphs and charts below display the returns, holdings and trading statistics for this model portfolio through this past Friday, September 10, 2010. Remember, that this is a hypothetical portfolio and there is no assurance that future results will replicate the historical ones. However, we have run significant back tests using this approach and have compared them to the actual results we have produced with the original QMA Core portfolio methodology and the AAS systems.

The comparative analysis was astounding. Most significantly was the Drawdown comparison. For the back-test period which ran from 12/31/02 to 6/30/10, the S & P 500 Drawdown was -56.78% occurring on March 6, 2009. The Actively Traded Portfolio had a Peak to Valley Drawdown of -23.52% while outperforming the S & P 500 by 251%. This compares to the out-performance provided by the Dynamic AAS Model Portfolio of 248%.

With a posted Gain Year-to-Date of 42.74% through September 10, 2010 versus the

S & P 500 of -0.50% and a Drawdown of -10.88% versus -15.99% for the S & P 500, there is much to be said for the new addition to our Model Portfolio feature.

The most recent transaction was done on Friday August 20, 2010 and can be reviewed below. For the past week the new portfolio gain 1.63% while the benchmark S & P 500 declined by -0.66%.

There was one trade done on August 20, 2010. Netlogic Microsystems (NETL) was sold and replaced with Isilon Sys. Inc. (ISLN).

This approach is not for everyone and not for 100% of the investment capital of those who chose to follow it in the future. We suggest that no more than 20% of your investment pyramid be invested using this approach. There is a tutorial on our approach which is available for review. While dated somewhat the underlying principals still apply.

Our best advice is to actively manage both your assets and your risk. The secret to both is in knowing your own investment tolerances.

If you are interested in receiving our traditional free trial subscription without having to submit your personal information, please send us your email address, and we will add you to our trial list for a period of two months from the date of your email at no charge to you. Of course, should you decide to subscribe to our service at the conclusion of your trial period, no other free period offers will be applicable. Send your email request to Info@Alpha-Advisor.com.

Wednesday September 8, 2010

2010-09-08T04:21:00.000-07:00

While trading is slow, sentiment can change quickly as we saw in today’s 11% jump in VIX to back above its 200-day moving average. It does not look like the market will get out of the trading range it has been stuck in for nearly four months any time soon.

Weekly Wrap Up September 3, 2010

2010-09-06T14:01:00.000-07:00

As the markets closed off the month of August last week, all ten of the indices listed below had significant negative returns for the month and for the Year-to-date period ending August 31, 2010. See below. However, things turned on a dime as September got underway with seven of the ten returning to positive territory by the week-end and the remaining three reducing their deficit significantly.

It would be nice if all of this happened in an orderly and consistent pattern, but that was not the case. In fact, the predominant portion of gains of the past week occurred during the first hour of trading on both Wednesday and Friday. Driven by positive news, or at least news that those who had been on the sidelines all summer interpreted as positive moved money into almost anything that looked cheap. It appears that Small to Mid cap issues with a Value profile enjoyed the largest gains over the week.

At the close of trading Thursday September 2, 2010, both the AAS Major Market Model and the AAS Traders Model were both signaling Bullish recommendations. Our current Asset Allocation range is 63% Invested and 37% Cash, Short or Inverse investments. On Friday, September 3, 2010 all three of the model portfolios were allocated accordingly.

As mentioned recently, the Alpha Advisor Newsletter is now available early Saturday morning for subscriber download. This change had been requested for a while by many subscribers who desired more advance notice of changes and timing.

The Technical Component of the AAS Major Market Model remains Bearish and as the indicators within this component strengthen, the allocation range will adjust accordingly. In the AAS Active Traders Model, only the Momentum indicators remains Bearish.

Breadth was very positive Friday, while trading volume dropped off ahead of the holiday weekend, averaging just 71% of its yearly rolling average. Advancing issues led declining issues by a 3 to 1 ratio on both the NYSE and the NASDAQ. The AAS Distribution Analysis reflects the heavy Bullish tone of the market with both the Buy and Sell recommendations being well over the respective category averages.

Crude oil futures slipped into the red Friday as the potential threat from Hurricane Earl waned after the storm was downgraded to a Category 1 hurricane. In addition, oil futures stumbled amid data pointing to slower than expected growth in the services sector last month, and further confirmed by a steeper than predicted dip in the Institute for Supply Management's (ISM) purchasing managers index. By the close, October-dated futures gave back 42 cents, settling at $74.60 per barrel. Meanwhile, gold futures pulled back from two-month highs as a stronger than anticipated jobs report diminished the metal's safe-haven appeal. However, the weaker dollar helped to limit gold's losses, with December-dated gold futures finishing on a deficit of $2.30, at $1,251.10 an ounce.

Even though we have been hinting that stocks were due for a bounce for awhile now, last week's surge came as somewhat of a surprise in the face of the continuing oversold condition of the markets and after falling for three weeks in a row. Over the course of the week, several of our lingering concerns were resolved, providing a much better outlook for the market going forward. Of critical importance was the ability of most of the major averages to hold at the lower end of their recent trading ranges. Considering all the bad economic news over the past few weeks, the bears could have easily taken control once again while driving prices lower. The fact that the market held in there is a big plus for stocks. Also, five of the six of our short-term indicators in the AAS Traders Model, crossed into positive ground. Finally, all of the five majors included in the model closed above their 50-day moving averages, which is a reliable intermediate-term trend indicator. However, none of the majors moved strongly enough to carry the 50-day average above the respective 200-day moving average. When this occurs, it will be a bell weather for the markets.

Next week could be critical as we are anticipating the gradual move back towards more normal levels of trading volume as the summer comes to an end. If this does not begin to occur, or if the major averages can not push back above their 200-day moving average lines within the near future, there is not much hope of a significant rally developing into the fourth quarter.

Last week, all five of the members in the AAS Traders Model closed above our forecasted Resistance Levels indicating a very profitable trade had you have gone long on Monday with a Limit Order at that forecasted level. This is the fourth consecutive week where the majors closed at or within an acceptable margin of the forecasted levels.

Levels to Watch in Trading:

Of the 26 Sector Groups that we track, 15 are rated as Buy while 0 are regarded Sell and 11 are rated Neutral. The prior week's totals were 2-15-9. The following are the strongest and weakest groups for the period ending 09/03/10. Strongest: Real Estate and Basic Materials. Weakest: Internet and Semiconductors.

The coming holiday shortened week will be slow on both the economic and the earnings fronts.

Monday - The market is closed for the Labor Day holiday on Monday.

Tuesday - There are no major economic reports scheduled for release on Tuesday.

Wednesday -The Fed's Beige Book for September will be released on Wednesday, along with the usual weekly report on U.S. petroleum supplies. Additional data will be available as the ICSC – Goldman Store Sales report is released in the AM followed by the Consumer Credit report which is to be released at 3:00 pm

Thursday- The weekly report on Jobless Claims, along with the International Trade report from the Commerce Department are scheduled to be released.

Friday - There are no major economic reports scheduled or Friday.

We recommend caution in your portfolios at this time, keeping your long exposure within the recommend AAS allocation levels, setting tight stop loss levels and taking some profits when appropriate. One might look for attractive opportunities in fixed income instruments as the result of last week's pullback in the bond market, as an acceptable medium term alternative.

AAS Active Traders model Portfolio up 26.5% last week. Awake and smell the Roses!!

2010-09-04T15:10:00.000-07:00

Last week the recently introduced Actively Traded Portfolio outperformed the general market recovery by a very significant margin. The portfolios yearly gain was enhanced by 26.5% for the week to a Year-to-date gain of 40.65% up from 32.14% at the end of the prior week. There were no trades in the portfolio during the week, nor were there any additions to the current positions which were reported last week.

By utilizing the Buy rule and an underlying list of securities, which could range between 50 and 100 names, this selection process will surface an excess number of eligible alternatives at any point in time. To reduce the list to a manageable number, we devised a ranking test that utilizes the AAS Adjusted Rate of Return calculation to determine the ranking top to bottom of the eligible equities. An alternative ranking factor is used in the event of ties. Here the value of the MACD Oscillator or other similar indicator might be used. Once the thirteen equities are identified, equal dollar sized positions are then created. When a Sell recommendation is generated for a security, it is sold and replaced with another suitable equity.

The graphs and charts below display the returns, holdings and trading statistics for this model portfolio through this past Friday, September 3, 2010. Remember, that this is a hypothetical portfolio and there is no assurance that future results will replicate the historical ones. However, we have run significant back tests using this approach and have compared them to the actual results we have produced with the original QMA Core portfolio methodology and the AAS systems.

With a posted Gain Year-to-Date of 40.14% through September 3, 2010 versus the S & P 500 of -0.95% and a Drawdown of -10.88% versus -15.99% for the S & P 500, there is much to be said for the new addition to our Model Portfolio feature.

The most recent transaction was done on Friday August 20, 2010 and can be reviewed below. For the past week the new portfolio gain 1.63% while the benchmark S & P 500 declined by -0.66%.

There was one trade done on August 20, 2010. Netlogic Microsystems (NETL) was sold and replaced with Isilon Sys. Inc. (ISLN).

Our best advice is to actively manage both your assets and your risk. The secret to both is in knowing your own investment tolerances.

If you are not currently a subscriber, we are offering you the opportunity of receiving a one month subscription to the Alpha Advisory Service bi-weekly newsletter for the low cost of $1.00 through our new Merchant relationship. If you are interested, please view the special offering page by clicking on the following link, AAS Special Offer.

If you are interested in receiving our traditional free trial subscription without having to submit your personal information, please send us your email address, and we will add you to our trial list for a period of two months from the date of your email at no charge to you. Of course, should you decide to subscribe to our service at the conclusion of your trial period, no other free period offers will be applicable. Send your email request to Info@Alpha-Advisor.com.

Model Portfolio Review and Modifications August 27, 2010

2010-08-30T04:38:00.000-07:00

In the August 14, 2010 blog, we introduced an Actively Traded Portfolio which was designed to compliment the Dynamic Portfolio model that has been featured for years in our newsletter. There are a few differences between the two approaches, but the primary one is the AAS Model Equity Portfolio employs the Buy and Sell Signals of our Major Market Model, while the Actively Traded Portfolio does not. As you know, the existing portfolio will go to Cash or Short alternatives when a Sell Signal is generated.

The Actively Traded Portfolio will ride through the volatility of the markets relying upon its internal Buy and Sell, Stop Loss and Capital Preservation rules to recognize deteriorating conditions in the portfolio, jettisoning the declining stocks and then replacing them with new selections.

The Buy rules are relatively simple. You Buy if the closing price is greater than the short term moving average and the short term moving average is greater than the long term moving average. Sell if the short term moving average is less than the long term moving average. Use a Trailing Stop loss rule which protects 80% of the base cost of each security.

By utilizing the Buy rule and an underlying list of securities which could range between 50 and 100 names, this selection process will surface an excess number of eligible alternatives at any point in time. To reduce the list to a manageable number, we devised a ranking test that utilizes the AAS Adjusted Rate of Return calculation to determine the ranking top to bottom of the eligible equities. An alternative ranking factor is used in the event of ties. Here the value of the MACD Oscillator or other similar indicator might be used. Once the thirteen equities are identified, equal dollar sized positions are then created. When a Sell recommendation is generated for a security, it is sold and replaced with another suitable equity.

We started with a $10,000.00 portfolio for our purposes, but with on line brokerage services and all-in-one price trading becoming more acceptable, this approach would work with most any starting base. We use average pricing which is calculated by averaging the days High and Low prices. All trades and pricing calculations are done on the day after the trade signal is generated. Commissions have been included in the calculations.

The graphs and charts below display the returns, holdings and trading statistics for this model portfolio through this past Friday, August 27, 2010. Remember, that this is a hypothetical portfolio and there is no assurance that future results will replicate the historical ones. However, we have run significant back tests using this approach and have compared them to the actual results we have produced with the original QMA Core portfolio methodology and the AAS systems.

The comparative analysis was astounding. Most significantly was the Drawdown comparison. For the back-test period which ran from 12/31/02 to 6/30/10, the S & P 500 Drawdown was -56.78% occurring on March 6, 2009. The Actively Traded Portfolio had a Peak to Valley Drawdown of -23.52% while outperforming the S & P 500 by 251%. This compares to the out-performance provided by the Dynamic AAS Model Portfolio of 248%.

With a posted Gain Year-to-Date of 32.14% through August 27, 2010 versus the S & P 500 of -4.97% and a Drawdown of -10.88% versus -15.99% for the S & P 500, there is much to be said for the new addition to our Model Portfolio feature.

The most recent transaction was done on Friday August 20, 2010 and can be reviewed below. For the past week the new portfolio gain 1.63% while the benchmark S & P 500 declined by -0.66%.

There was one trade done on August 20, 2010. Netlogic Microsystems (NETL) was sold and replaced with Isilon Sys. Inc. (ISLN).

This approach is not for everyone and not for 100% of the investment capital of those who chose t follow it in the future. We suggest that no more than 20% of your investment pyramid be invested using this approach. There is a tutorial on our approach which is available for review. While dated somewhat the underlying principals still apply.

Click on the following to view the video: AAS Asset Allocation Tutorial

Our best advice is to actively manage both your assets and your risk. The secret to both is in knowing your own investment tolerances.
If you are not a currently subscriber we are offering you the opportunity of receiving a one month subscription to the Alpha Advisory Service bi-weekly newsletter for the low cost of $1.00 through our new Merchant relationship,. If you are interested, please view the special offering page by clicking on the following link, AAS Special Offer.

If you are interested in receiving our traditional free trial subscription without having to submit your personal information, please send us your email address, and we will add you to our trial list for a period of two months from the date of your email at no charge to you. Of course, should you decide to subscribe to our service at the conclusion of your trial period, no other free period offers will be applicable. Send your email request to Info@Alpha-Adviosr.com.

Weekly Wrap Up August 28, 2010

2010-08-28T16:31:00.000-07:00

The markets are heading into the unofficial last week of summer with their tails tucked between their legs and running for the sidelines. Friday’s rally fueled by Chairman Bernanke’s comments will be short lived in my opinion as traders will take this weekend to ponder exactly what is it that the Fed can do to turn the economy around and come up with the obvious answer, nothing. The end result is next week will be a repeat of this past summer’s trading patterns with yet another decline likely.

Buying debt as Mr. Bernanke eluded to on Friday, will do nothing more than put liquidity into the banks, which is not the problem. In reality, the Fed only has three options in its arsenal; manage interest rates, adjust Bank Reserve requirements and tweak the standards used to test and determine Bank solvency. Painted into a corner as the economy currently is, none of these three options will do anything to move the Nation towards adding jobs or stimulating Consumer spending. One might argue that employing any or all of these alternatives might worsen the situation rather than help solve the problem. Adjusting rates would add fuel to the all ready lengthy rally which the Bond markets have been enjoying, funded for the most part with excess liquidity in the banking system. Manipulating Reserve levels would have the same result, and tweaking the credit standards would set us up for a repeat of the 2007-2008 melt down.

President Obama and Congress need to wake up and get serious about creating jobs. They need to take a look at what was done in the 70’s to stimulate job growth. Perhaps we should provide Tax credits to employers who both pay taxes and create new jobs which employee individuals who have been on the unemployment rolls for twelve months or longer is an option. They need to guard against appearing to create jobs when in reality, they are fueling job switching. Another idea might be to look again at the Corporate tax rolls and find ways to bring the actual taxes paid into line with the book taxes shown in the financial reports. Most large corporations do not pay a fraction of what it appears they pay, and this condition has prevailed to the determent of small business and individuals far too long.

As measured by the AAS Traders Model, all five members of this group continued to weaken over the past week. None closed above their 50-day moving average while the 50 continued to trail below the respective 200 day averages.

Of the three indices which make up the Dow Jones Composite, (the Industrials, Transports and Utilities) only the Utilities were up for the week. This scenario, in addition to the fact that oil and natural gas have moved well into oversold territory recently, is worrisome.

After trying to recover in 2010, natural gas appears right back to its old ways of consistently declining. Gold and silver have both moved higher recently as worries about the economy persist. Both are right at the top of their respective trading ranges. And until inflation begins moving up decisively, we are unlikely to see a big jump in interest rates, which translates into a continuation in the current Bond Market Rally.

Breadth was very positive Friday while trading volume was modest averaging 76% of the rolling one year average. Friday saw Advancing issues lead declining issues by a 6 to 1 ratio on the NYSE and by a 4 to 1 ratio on the NASDAQ. Crude oil continued yesterday’s rally. The October futures contract rose $1.81 to settle at $75.17 per barrel.

Friday’s rally was an oversold bounce and has not changed the short term downtrend that the major indexes have been in for about three weeks. The most positive things about Friday’s rally are the 10% drop in VIX (24.45) and the S&P 500’s ability to hold the 1040 level. This suggests that this oversold rally could go further, but market actions are likely to remain volatile for a while yet.

Earlier this month, when the major averages struggled and then failed at the June highs, it was a sign that the summer rally was coming to a close. That, in fact, has been the case for the last couple of weeks as the DJIA has drifted down to the lower end of its trading range. The majors were able to stay above their July lows, which could signal that they have put in an intermediate-term bottom. If that's the case, stocks could once again rally back to challenge their August highs in the near future.

The market was very oversold going into the last session of the week so the rally was not a total surprise. Despite the recent weakness, stocks have showed remarkable resilience in the face of lousy economic news, which is bullish. However, several negatives which have existed for the last couple of weeks, remain a concern. These include the fact that most of the major averages have fallen below both their respective 50-day and 200-day moving averages. Also, there has been considerable deterioration in a couple of our short-term momentum indicators.

While conditions continue to point to a favorable market over the next couple of months, there is a good probability that computer trading will keep the markets in a trading range over the short-term.

Of the 26 Sector Groups that we track, 2 are rated as a Buy while 15 are regarded as Neutral and 9 are rated as Sell. The previous week's totals were 1-13-12, again a significant one-week reversal. The following are the strongest and weakest Sectors for the period ending 08/13/10. Strongest: Soft-Ware and Utilities. Weakest: Financial Services and Internet.

Levels to Watch in Trading:

Here is a brief list of some of the key events for the upcoming week. The big question is what is happening with employment and when will we begin to see relief on that front. In the coming week, all eyes will be on the jobless data being released Friday.

Monday - The Commerce Department will release personal income and spending reports for July.

Tuesday - The Case-Shiller home price index, the Chicago Purchasing Managers' Index and the Conference Board's Consumer Confidence Index for August will be released.

Wednesday - The ADP report on private sector job growth in August will kick off three days of employment data. The Institute for Supply Management (ISM) will release its manufacturing index for August, while the Commerce Department will report on construction spending in July and auto sales for August. Also due on Wednesday is the weekly report on U.S. petroleum supplies.

Thursday - We'll get the weekly report on new jobless claims, along with July reports on factory orders and pending home sales.

Friday - On Friday the Labor Department's numbers on nonfarm payrolls and the unemployment rate for August is due. The ISM will also release its services index for August.

There is a solution and it has been around for a long time. However, no one in Washington is currently willing to step up and take the initiative to implement the steps necessary to reduce the deficit and turn the economy around. On Friday, a report was released which was little mentioned in the media. The author was Paul Volker and the subject – “Corporate Tax System Flawed.” See the article in the Wall Street Journal by Martin Vaughan and Jared A. Favole for more details.

Mid Week Update

2010-08-26T05:41:00.000-07:00

The S&P 500 (SPY) holds at the 1044 support and the DJIA (DIA) holds at 9956 for now. There is no change to the bearish momentum and yesterday’s bounce is nothing more than that an oversold bounce. We noticed that in yesterday’s IBD’s The Big Picture column, the Current Outlook of the market finally changed to “Market in Correction”.

Today we will see the jobless claims data. It would not be surprising to see additional oversold bounces should the data not be too bad. Continue to watch the 1040 level of the S&P 500 (SPY). Should that be broken, there is not much support until we get to the July low near 1010.

Our AAS Support and Resistance forecasts published this past weekend remain intact. There have been no status changes to the ratings for the five members of the AAS Trades Model; all five members remain in Over Sold status with a continuing Sell recommendation.

The mid-week charts of both the DIA and the SPY indicate a reversal of last weeks patterns with Wednesday possibly being the bottom of the weekly trading “V” with some room to the upside for today or Friday’s traders.

The two charts above run from Thursday 8/19/10 through 8/25/10.

If you are not a current subscriber but are interested in subscribing we are offering you the opportunity of receiving a one month subscription to the Alpha Advisory Service bi-weekly newsletter for the low cost of $1.00 through our new Merchant relationship,. If you are interested, please view the special offering page by clicking on the following link, AAS Special Offer.

If you are interested in receiving our traditional free trial subscription without having to submit your personal information, please send us your email address, and we will add you to our trial list for a period of two months from the date of your email at no charge to you. Of course, should you decide to subscribe to our service at the conclusion of your trial period, no other free period offers will be applicable. Send your email request to Info@Alpha-Adviosr.com.

Weekly Wrap Up August 22, 2010

2010-08-22T11:15:00.000-07:00

The adage "A picture is worth a thousand words" refers to the idea that complex stories can be described with just a single still image, or that an image may be more influential than a substantial amount of text. The picture below does just that.

As evidenced by our comments last week, all five indices tracked in the AAS Traders Model faired poorly for the week. The daily charts of the DJIA featured above were repeated by each of the members of this group. The markets peaked Tuesday and Wednesday on an intraday basis and then fell for the remainder of the week. Earnings news moved the markets on Monday and Tuesday, but in the face of the end to the recent earnings season, which officially ended Tuesday with Wal-Mart’s report, varying news releases took over and it was off to the races we went. Pessimists found much doom and gloom in the weak Jobs reports released Thursday, along with the words of pessimism leaked to the market by the Philadelphia Fed. This data and with the short fall in the Housing data released Tuesday was all the fuel necessary to turn the markets on their heels and into negative territory.

All short, intermediate and long term trends are clearly bearish suggesting that there remains the risk of a significant breakdown. The AAS Traders Model continues to recommend Sell Status for all five of the members.

We again highlight the lack of conviction among investors and advisors in the current market environment. Following the July rally, bullish sentiment based on the Investors Intelligence weekly survey jumped to its highest level since May. In this week's survey, bullish sentiment declined 12% for its largest weekly decline since the flash crash of 09’. Review the Investment Indicators page of the most recent Alpha Advisor release for more details.

Our publishing guidelines for the weekend edition have been adjusted in response to subscriber requests. The weekend edition will now be made available on the web site by 12:00 Noon Saturday for your downloading and review.

When Wall Street strategists were polled by Bloomberg in mid-July, the consensus target for the end of 2010 was 1,250. More recently, the consensus year-end target has dropped to 1,235. At the start of 2010, the end-of-year target was 1,225; most likely the consensus will return to that level or lower early in the third quarter. Without Job growth driven by top line sales growth, there just is not much else for the markets to do but continue to trade laterally followed by a correction downward.

Stocks traded in a fairly narrow range last week as prices stayed between the July lows and the August highs, ending the week very close to the AAS Near Term Support forecasts released last weekend. Volume was very light at just 71% of the rolling one year average as there continues to be a lack of commitment by both the bulls and the bears.

Although the market remains range bound, there are a few negatives that have recently developed and are becoming a concern. Most troubling is the fact that all of the major averages are now trading below their respective 50-day and 200-day moving averages. Recent rally attempts that have pushed prices above these important support levels have failed to hold. Also, all of the short-term technical indicators that we follow within the AAS Traders Model have slipped into negative territory. Most importantly, we consider the Negative biases of the Vortex Indicator to be a strong indicator of the future direction of the markets for the up and coming week.

An extremely volatile week ended with the DJIA losing 90 points or -0.9%, and ended beneath its 10-week moving average for the first time since July 16. The S&P 500 Index lost 8 points while declining -0.7% last week. Gaining for the week, the NASDAQ Composite actually gained 0.3% during the week up 6 points, the Russell 2000 up 1 point gained 0.21% and the Value Line Geometric gained less than 1 point up 0.09%.

On the fundamental front, we have a very interesting dichotomy. The bad news is the economic data has taken a steady turn for the worse over the past few months. As mentioned earlier, the Jobs data indicates that jobs just simply aren't coming back as claims recently made a nine-month high. Retail sales are weak, consumer sentiment continues to deteriorate, and manufacturing data is sinking as well. Not to mention continued new lows in the two-year yield, suggesting the bond market is still worrying about this recovery.

The good news is earnings season was excellent once again. Interest rates are low, and productivity during the first half of this year was over 6%, the highest since the 1960s. But what really has us excited is the recent merger-and-acquisition activity. When companies are actively buying each other, it is a sign companies could be undervalued and this is usually a very bullish sign for the overall market.

On the fundamental front, our technical indicators are a mixed bag as well. Some say that for the longer-term, things still look good, but short term is anyone's guess. Our call is that for the near term the S&P 500 Index remains trapped in a trading range from the recent peak around 1,130 to its lows around 1,040. We wish there was more to say, but until there is a break in either direction, making a short-term bet will be difficult. There is so much indecision right now regarding the economy and Washington that the indicators we follow all shout out with uncertainty. As seen on page 4 of this report, there has been lot of movement of late, but the S & P 500 has gone nowhere the past few months. Since our Sell signal of May 18, 2010 the S & P 500 index has declined -3.38% but the range has bounced around between up 1.68% to down -7.81%.

Breadth was negative while volume expanded due to options expiration. Declining issues outnumbered advancing issues by nearly a 3 to 2 ratio on both the NYSE and the NASDAQ. Crude oil for September delivery ended its run as the front-month contract on a negative note. September-dated crude oil closed on a loss of 97 cents, or 1.3%, at $73.46 per barrel. On a weekly basis, crude futures shed 2.6%.

Gold futures, meanwhile, endured a modest daily decline due to strength in the U.S. dollar -- but the precious metal's reputation as a safe-haven investment helped keep losses to a minimum. By the close, gold for December delivery was down $6.60, or 0.5%, at $1,228.80 per ounce. For the week, gold eked out a slim gain of 1%.

Levels to Watch in the coming week:

The list of key data releases for the upcoming week is short.
Monday
• There are no major economic reports on Monday.
Tuesday
• The National Association of Realtors will report on existing homes sales in July.
Wednesday
• The Commerce Department will report on new homes sales for July and durable goods orders for July. The weekly report on U.S. petroleum supplies is also scheduled for release.
Thursday
• The weekly report on new jobless claims is to be released.
Friday
• The Commerce Department releases their revised look at second-quarter gross domestic product, and the University of Michigan consumer sentiment index for August is to be released.

Of the 26 Sector Groups that we track, 1 is rated as a Buy while 13 are regarded as Neutral and 12 are rated as Sell. The previous week's totals were 5-6-15, again a significant one-week reversal. The following are the strongest and weakest Sectors for the period ending 08/13/10. Strongest: Soft-Ware and Real Estate. Weakest: Financial Services and Semiconductor.

Those Traders' not on vacation have experienced a hellish and volatile summer thus far. Five of the nine weeks since the vacation season began have ended with a negative outcome, while for the period the markets have eked out just 0.78% gain for the effort. With volume remaining exceptionally low and the uncertainty about the economy continuing, there is truly nothing which offers us encouragement at this time.

Last week, we introduced an active trader’s portfolio made up of only thirteen positions and traded under a specific set of rules. For the next several weeks we will be highlighting the weekly changes in this model portfolio.

For the Year-to-date period, the model portfolio has gained 30.27%, and increased 1.13% for the week ending August 20, 2010 versus a decline of -0.70% for the benchmark S & P 500 index. There was one trade which was consummated on Friday, August 20, 2010. Netlogic Microsystems Inc. (NETL), see chart below, was removed from the portfolio and no replacement was made at that time.

Weekly Wrap Up August 14, 2010

2010-08-14T18:03:00.000-07:00

Concerns and out right fear that the U.S. economy would slip back into recession grew over the past week with every successive economic report released. Employment remains weak Economic growth prospects are dimming around the globe and Manufacturing data was weaker than expected in both Japan and China. The Bank of England cut its outlook for the British economy, while economists from Wall Street to the Federal Reserve agreed that the economic recovery is progressing more slowly than expected. The DJIA, along with the other members of the AAS Traders Model, reacted by retracing back below their mid-June highs, reversing the gains of late July and early August resulting in a Sell recommendation for all members. The status change occurred after the close of trading on Wednesday August 11, 2010.

The bulls have had no answers for the past four sessions, with all five members of the AAS Traders Model turning in declines for the last four days of the week. In the face of significant weekly declines, there has been no sign of buyers attempting to regain the failed support levels. At the close on Friday, all five members had significantly broken below the forecasted levels of support published in last weekend’s blog.

For the week, the DJIA closed at 10,303.15, losing 350 points; down -3.29% for the week. The S & P 500 closed at 1077.25, losing 43 points; down -3.78%, the NASDAQ closed at 2173.48, losing 115 points or -5.02%. The larger members of the group faired worse in comparison with the RUT giving back 61 points, -6.32% and the Value Line Geometric closed at 302.38 down 21 points or -6.36%.

For the third consecutive week, the NASDAQ underperformed the DJIA on a percentage basis as the tech sector continued to be under pressure. Over the past week, we saw the NASDAQ fall even more the other members of the model, in part because of the disappointing performance by technology stocks, most of which got slammed as the result of the market’s poor reaction to Cisco’s news release.

The market internals were mostly negative for the week. On Friday, declining issues out numbered advancing issues by an 8 to 7 margin on the NYSE. While on the NASDAQ exchange, declining issues out numbered advancing issues by a 9 to 4 ratio. Trading volume was very tepid in general for the week averaging only 73% of the yearly rolling average. The AAS Distribution analysis markedly reflects the shift with Buy recommendations being significantly lower than the Mean and Sell recommendations, currently at twice the Average level. The AAS Major Market Model remains in a Sell mode with the Sentiment component once again turning Bearish as of Friday’s close.

The overall Market Posture deteriorated very quickly during the past week with only the Momentum indicator remaining Bullish on both the DJIA and the S & P 500 markets and the five other indicators being negative. On the remaining three members, all six indicators were Bearish.

Crude futures swallowed their fourth consecutive daily loss Friday as traders remained uninspired by the day's tepid economic data. Against a backdrop of lingering economic worries, crude oil for September delivery shed 35 cents, or 0.5%, to settle at $75.39 per barrel. Crude futures shed 6.6% from last Friday's close, marking their largest weekly percentage decline in more than a month.

Gold futures also swallowed a minor daily drop with the precious metal pulling back from Thursday's freshly tagged six-week peak. Due to strength in the U.S. dollar, gold for December delivery shed 10 cents to finish at $1,216.60 per ounce. However, gold added 0.9% on a weekly basis, marking its second consecutive winning week.

The fact that the DJIA made its eighth new high since the July low, along with continuing trend of the NYSE, Breadth indicators remaining strong and the NYSE A/D line maintaining its upward trend bode positive and supportive for the potential renewal of the current rally. This past week’s sell off left all of the major averages in an oversold condition based on stochastic readings furthering the possibility of a renewed move upward.

Levels to Watch in Trading:

With Earnings season winding down, there is just a brief list of key events for the upcoming week.

Monday

· The New York Fed will release its Empire State Manufacturing Survey for August on Monday.

Tuesday

· There is a lot of economic data to consider on Tuesday. The Commerce Department will release reports on housing starts and building permits for July, while the Labor Department will supply July readings on the Producer Price Index (PPI) and the core PPI. Meanwhile, the Federal Reserve will report on industrial production in July.

Wednesday

· The usual weekly report on U.S. petroleum supplies is due.

Thursday

· The weekly report on initial jobless claims will be released on Thursday, along with the Conference Board's Leading Indicators Index for July, and the Philadelphia Fed Index for August.

Friday

· There are no major economic reports scheduled for Friday.

Of the 26 Sector Groups that we track, 5 are rated as a Buy while 6 are regarded as Neutral and 15 are rated as Sell. The previous week's totals were 16-9-1, a significant one-week reversal. The following are the strongest and weakest Sectors for the period ending 08/13/10. Strongest: Global Telecom and Utilities. Weakest: Financial Services and Semiconductor.

Following last week's slump, the DJIA is down -1.2% on a Year-to-date basis with the S & P 500 down -3.2%, the NASDAQ down -4.2%, the Russell 2000 down -2.5% and the Value Line Geometric down -2.1% all on a Year-to-date basis as well. Most traders are frustrated by the losses incurred recently and the choppy action of the last several months. The graph below is typical of the range bound status that the markets have been in since mid-May.

As mentioned previously, the AAS Major Market Model remains in a Bearish mode, which it has been in since May 18^th or 60 days. This is one of the longer Bearish periods in the 22 year history of the model. Since turning Bearish, the Market as measured by the S & P 500 is down -2.7%. While not significant in and of itself, the range which the market has vacillated within has gone from up 1.68% to down -7.81% over this period of time. With the current weakness in trading volume we see a continuation in this market volatility. Year-to-date the AAS Model Portfolio is up 6.2% versus a decline of -3.2% for the benchmark S & P 500 index.

We advise caution and patience in the coming weeks, especially in light of the fact that the upcoming week is Options expiration week.

The recent recession has shaken us to the core and transformed our myopic view of life. Many are now ready and willing to take a more demonstrative and responsible approach in their decision making and to take back control of their financial future. For many, we are searching for the tools and knowledge base that will enable the greatest results. A commitment to be wiser about investing is paramount in the promise and hope for a brighter tomorrow. So, let me share with you some insight to help you make that happen.

Over several months, we have developed a new model portfolio which we believe would balance an overall portfolio strategy. It’s comprised of a significant Buy and Hold component and an active trading component.

For the moment, we will leave the methodology for the Buy and Hold segment on hold and briefly discuss the active trading strategy.

At any one time the actively traded portfolio will hold no more than thirteen positions. There is no cash holding requirement, and this portfolio does not short or use inverse investment alternatives, ETF’s or mutual funds.

By utilizing the Buy rule and an underlying list of securities which could range between 50 and 100 names, this selection process will surface an excess number of eligible alternatives at any point in time. To reduce the list to a manageable number, we devised a ranking test which utilizes the AAS Adjusted Rate of Return calculation to determine the ranking top to bottom of the eligible equities. An alternative ranking factor is used in the event of ties. Here the value of the MACD Oscillator or other similar indicator might be used. Once the thirteen equities are identified, equal dollar sized positions are then created. When a Sell recommendation is generated for a security, it is sold and replaced with another suitable equity.

The graphs and charts below display the returns, holdings and trading statistics for this model portfolio through this past Friday, August 13, 2010. Remember, that this is a hypothetical portfolio and there is no assurance that future results will replicate the historical ones. However, we have run significant back tests using this approach and have compared them to the actual results we have produced with the original QMA Core portfolio methodology and the AAS systems. The analysis was astounding. With the portfolio’s low turn over rate and an eye catching hypothetical return of 29.14% YTD, we hope you find the results intriguing and informative. Five and Ten year data is available upon request.

Weekly wrap up August 7th 2010

2010-08-07T12:49:00.000-07:00

As investors re-assessed news of the worse-than-expected job losses in July, hoping that the Federal Reserve might hint next week at new steps to boost the economy, U.S. stocks finished the session well off the lows on Friday, leaving intact strong weekly gains. Concerns about jobs and economic recovery are expected to overshadow the current strong earnings season for investors next week as Federal Reserve Board leaders meet to discuss whether or not to further stimulate the weak economy.

The Federal Open Market Committee meets in the coming week, and while it is not expected to alter interest rates, it is expected to announce further measures for so-called systemic stimulation. This would likely keep interest rates low, boosting bond prices and leaving equity investors confused.

For the past week, four of the five major indices tracked in the AAS Traders Model turned in a reasonably strong performance but the Russell 2000 lagged the group. The DJIA closed up 188 pts or 1.79%, the S & P 500 added 20 pts or 1.82% and the NASDAQ tacked on 34 points or 1.50%. The Value Line Geometric added 8 pts or 0.88%, while the Russell 2000 lost a point or two down -0.05% for the week. The AAS Traders Model remains in a recommended Buy status for all five members currently.

Click on the image to enlarge.

Respectively, all five of the members of this group finished the week within a 1% range of the Near Term Resistance levels which were forecasted in last week’s Alpha Update.
Market breadth finished the week in negative ground, while volume continued to be very thin; averaging 74% of its rolling one year average for the week. Declining issues outnumbered advancing issues by a 16 to 13 ratio on the NYSE and by a 17 to 9 ratio on the NASDAQ.

U.S. Treasuries rallied as demand for the safe-haven assets surged. The dollar hit its 2010 low against the yen and weakened against the Euro. Gold prices again rose above $1,200 as investors moved to the perceived safety of the precious metal. The U.S. dollar, which weakened after the jobs report, is further assisting the price of Gold metal by making it less expensive for buyers using other currencies.

About 90% of the S&P 500 has reported quarterly earnings so far according to Thomson Reuters. Of those companies reporting, 75% have turned in results above expectations and 16% have fallen below estimates.

The continued low levels of trading volume suggest the lack of institutional investor participation in this an already tentative market. Investors do not know how to interpret the conflicting signals being sent their way between earnings and economic data.

Click on the image to enlarge.

Continuing the recent trend, Trading was guided this past week by the interpretation of the technical indicators, especially those of the S&P 500. On the side of our Day Trading activities, we experienced a very frustrating week with quick flip flops in the early session activity making directional interpretation and positioning very difficult to say the least.

The AAS analysis above reflects a slight backing off in both the Momentum Index and the ROC Index, however, both remain bullish. All five members of the Traders Model remain in an Over Bought condition currently. Finally, while all members closed Friday above their averages, not much improvement was made by the moving averages themselves last week, with the 50 Day average remaining well below the 200 Day average in all cases.

A quick review of the AAS Indicators which are on page 2 of today’s newsletter edition, reflect the short term Bullish status for the majority of both the Daily and Weekly Technical and Sentiment indicators analyzed by our service.

In spite of Friday's sell-off, there are several positives worth mentioning which occurred during the past week portending that the summer rally may yet have a way to go. First, was the ability of the DJIA to take out its 06/21/10 high (10594.16) during Monday's session. Additionally, the NYSE breadth was strong all week as the A/D line posted an all time high on 08/04/10, while the number of new 52 week highs continued to expand. On 08/02/10, the number of NYSE new highs totaled 307 which was the highest amount since 04/20/10 (316) when the DJIA was over 11000. Finally, as noted above, the new high recorded by the DJIA on 08/04/10 was confirmed by four of the five major averages which is a plus.

The main negative at this juncture continues to be the inability of the four remaining members of the AAS Traders Model to better their June highs which are providing Resistance to the current trading range.

Click on the image to enlarge.

Industry Groups: Of the 26 Industry Groups that we track, 16 are rated as Buy, while 9 are regarded as Neutral and 1 is rated Sell. This continues to reflect a very marked improvement over the past few weeks and a significant shift from the previous week's totals which were 8-15-3. The following are the strongest and weakest groups for the period ending 08/06/10. Strongest: Real Estate and Transports. Weakest: Retail and Semiconductor.

The AAS Major Market Model remains Bearish with only the Sentiment component having returned to a Bullish status over the past several weeks. The distribution of the issues tracked by our service has strengthened significantly in recent weeks. However, the fact that the markets remain locked in their current trading ranges has kept the Trend component from confirming the move. Likewise, the recent increase in intra-day volatility has kept the technical component from moving into a Bullish mode. Hence, the AAS Distribution analysis sets forth a strengthening condition amongst the securities followed by the service. Current Buy recommendations are well above the average of the category with both Sell and Neutral recommendations hovering at the average.
x Mutual Funds, Growth Stocks, Value Stocks, Options, Futures

Click on the image to enlarge.

In the week ahead, concerns about jobs and the economic recovery are expected to overshadow the continuing news of a strong earnings season for investors next week. Additionally, the Federal Reserve Board leaders will be meeting in the coming week to decide whether to further stimulate the weak economy. Caution and patience along with excellent stock picking will be the call to order for the days ahead.

Monday

· There are no economic reports slated for release on Monday.

Tuesday

· Tuesday reports will be released detailing preliminary second-quarter productivity, second-quarter unit labor costs, and June's wholesale inventories. But for most investors the Federal Open Market Committee's decision on U.S. monetary policy and the accompanying statement will likely be the center of attention.

Wednesday

· The market will be braced for the weekly report on U.S. petroleum supplies on Wednesday, along with June's trade balance and July's Treasury budget.

Thursday

· The weekly report on initial jobless claims will be released on Thursday, as will July's import/export prices.

Friday

· On Friday we will see the current data on inflation, with the release of the consumer price index (CPI) and the core CPI reading. Also scheduled for release are July's retail sales, Augusts’ University of Michigan consumer sentiment index, and June's business inventories index.

Through our new Merchant relationship, we are offering you the opportunity of receiving a one month trial subscription to the Alpha Advisory Service bi-weekly newsletter for the low cost of $1.00. If you are interested, please view the special offering page by clicking on the following link, AAS Special Offer. If you are interested in receiving a free trial subscription without having to currently submit your personal information, please send us your email address, and we will add you to our trial list for a period of two months from the date of your email at no charge to you. Of course, should you decide to subscribe to our service at the conclusion of your trial period, no other free period offers will be applicable. Send your email request to Info@Alpha-Advisor.com.

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Mutual Funds, Growth Stocks, Value Stocks, Options, Futures

Trading Ideas August 6th 2010

2010-08-06T05:22:00.000-07:00

The following table covers set up ideas for Long Trades using either the stock or its Call contract, and conversely set up ideas for Short Trades using again either the stock or its Put contract.

The list is derived by running an analytic which surfaces companies based upon a statistical analysis of the price action of the underlying security as compared to the S & P 500. The product of the research is called ShtAlphaWtd. The higher the positive number the greater the out performance, and again conversely, the larger the negative number the greater the under performance.

Both the High Margin and the Low Margin require some definition as well. Both are derived by statistically measuring the trading range from the Open to the High or the Open to Low of the day, over varying periods of time.

The optimized product can then be adjusted by the variance you may experience between the Pivot Point and your personal execution price to then determine the unique Limit and Stop prices for your trades.

We use this approach for trading either the underlying security or the option contracts for the underlying. In managing this process, we run validation back testing on this statistical approach for each security which we list, and we will only include names with Win/Loss ratios in excess of 65% Wins and Less than or equal to 35% Losses.

In a personal account we began trading on June 17, 2009 in this manner, since then we have placed 438 trades since then, experiencing a 62.1% Win to 37.9% Loss ratio.

Should you desire to use a more traditional approach, both Limit and Stop price suggestions are available for your use.

It is suggested that you run charts on each of the names provided, do some additional fundamental research for your own satisfaction, and try paper trading this list for a while. We will make similar lists available twice each week for your reference. The twenty names come from a master list which includes 375 underlying securities selected for their credit worthiness, price level, trading volume and price volatility. The majority of the names on the list are available for option trading.

Each day prior the Open we select two or three names to trade that day. Then we identify the anticipated Opening price by watching the pre-market price action if available or use the forecasted Pivot Point to determine the Near-the-Money Strike price to trade. We then will set up charts for both the appropriate Call and the Put contract using the near month contract. We move one month out when entering expiration week going to the next month. On a second monitor we will set up Charts for the underlying securities and watch at the Bell for direction and price action. When our indicators are triggered, and we use MACD and Stochastic with optimized shorter term setting for this purpose we Buy to Open and then set a OCO (One Cancels the Other) order with both our Limit and Stops set for each trade. This approach has worked very handsomely for me for me, you may tinker with it as you see fit.

Remember, trading options is not suitable for everyone, and Options are not suitable for all investors, as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses.

Through our new Merchant relationship, we are offering you the opportunity of receiving a one month trial subscription to the Alpha Advisory Service bi-weekly newsletter for the low cost of $1.00. If you are interested, please view the special offering page by clicking on the following link, AAS Special Offer. If you are interested in receiving a free trial subscription without having to currently submit your personal information, please send us your email address, and we will add you to our trial list for a period of two months from the date of your email at no charge to you. Of course, should you decide to subscribe to our service at the conclusion of your trial period, no other free period offers will be applicable. Send your email request to Info@Alpha-Adviosr.com.

To view enlarge image click on the image itself.

ATML, BG, TBT, MOT, ORCL, ATVI, YHOO, GLL, SEF, VIV, DIG, UCO URTY, EET, DDM, XPP, UWM, UYG, SAA

Saturday, July 31, 2010 Weekly Wrap Up

2010-07-31T14:52:00.001-07:00

The major indexes went nowhere last week, even though it was the busiest week of the current earnings season. In addition to earnings releases, there was plenty of economic data to keep traders nervous. Stocks started the week with a third consecutive day of gains, with all of the major markets tracked in the AAS Traders Model reaching their weekly intra-day highs on Tuesday. After that, the party was short lived; the remainder of the week saw listless trading as the majors continued to trade below both their 50 and 200-day moving averages respectively.

To view enlarge image click on the image itself.

The positive points which we have commented on over the past several weeks remain intact, suggesting that the rally off of the July low’s may yet have a ways to go. Breadth has been very good both at the NASDAQ and the NYSE. On Friday, Advancing issues led declining issues by a 17 to 12 ratio on the NYSE and by a 7 to 6 ratio on the NASDAQ. The trading volume average was low for the past week averaging just 80% of the rolling yearly average. See the AAS Distribution Analysis below. Crude oil also recouped its early loss. The September futures contract settled up $0.59 at $78.95 per barrel. Gold futures also finished in the black Friday, as weaker-than-expected GDP data sparked an onslaught of safe-haven investing. By the close, December-dated gold futures had gained $12.70, or 1.1%, to end at $1,183.90 an ounce. For the week, the malleable metal gave up less than 0.1%, but finished July on a deficit of nearly 5% -- gold's heftiest monthly loss since December. Not surprising given the DJIA gained 7.13% for the month followed by the S & P 500 up 6.99%, the Russell 2000 up 6.38% and the leader for the month the NASDAQ up 7.26%. The AAS Major Market Model is now in Bullish Status. However, we remain allocated 100% to Cash at this time. The Sentiment component is now Bullish, however the Allocation process is driven by the Technical component of the model and as of this time the technical volatility in the daily markets is not allowing this component to confirm the recommendation. You may chose to over ride the Asset Allocation recommendation if you so desire.

To view enlarge image click on the image itself.

The AAS Momentum Index, see the graph blow, is back in bullish ground, while the ROC Index has returned to a positive slope. On the upside for the week, the DJIA gained (0.40%) up 41 points, joined by the Russell 2000, up (0.04%) with a negligible point gain. The S & P 500 lost (-0.10%) giving back 1.06 points, the OTC down (0.65%) or 15 points and the Value Line Geometric down -0.36% or 1.15 points. With the exception of the Russell 2000, all other members tracked by the AAS Traders Model continue to show technical weakness with the 50 day moving averages continuing to track below the 200 day averages respectfully. In the case of the Russell 2000, the moving averages appear relatively flat in relation to each other. All five members reflect the lingering Over Bought status mentioned in prior reports.

The major negative at this juncture remains the inability of most of the major averages to break out of their respective trading ranges. The top end of the ranges for most of the majors is around their early June 2010 highs.

To view enlarge image click on the image itself.

Numbers to Watch
• Dow Jones Industrial Average (DJIA – 10,465.94) - resistance at 10,642, support at 10,239.
• S&P 500 Index (SPX – 1,101.60) - resistance at 1,117, support at 1080.
• NASDAQ Composite (OTC – 2,254.70) - resistance at 2,292, support at 2199.
• Russell 2000 (RUT – 650.89) – resistance at 663, support at 633.
• Value Line Geometric (VLE – 315.86) – resistance 322, support at 309.

To view enlarge image click on the image itself.

Industry Groups: Of the 26 Industry Groups that we track, 8 are rated as Buy, while 15 are regarded as Neutral and 3 are rated Sell. This reflects a very marked improvement from the previous week's totals which were 8-15-3. The following are the strongest and weakest groups for the period ending 07/29/10. Strongest: Basic Materials and Global Financials. Weakest: Semiconductor and Healthcare.

Of the 336 S&P 500 companies that have reported second-quarter earnings thus far, 75% exceeded expectations, 10% reported earnings in line with analysts' estimates and 15% missed, according to data recently released by Thomson Reuters. Next week will be the peak week of the second-quarter earnings season with 103 S&P 500 companies and three Dow components scheduled to report results.

The month of July provided a compelling story for the equity markets with the Dow, the S&P 500, the Russell 2000 and the OTC all notching up monthly gains in and around the 7% level.

The U.S. stock market is likely to continue bouncing around in the current trading range in the week ahead with another heavy round of earnings reports in store, along will a full slate of data on the economy and employment in particular. Below is a brief list of some of the key events for the upcoming week.

Monday
•The Commerce Department will release its construction spending report for June. We'll also get a look at the Institute for Supply Management (ISM) Index for June.
Tuesday
•The Commerce Department will release reports on personal income, personal spending and factory orders for June. Data on July auto sales will be released in the afternoon.
Wednesday
•U.S. petroleum supplies data is due to be made available on Wednesday, along with the ISM services index, but Traders will likely pay the most attention to the ADP report on private sector employment.
Thursday
•The weekly report on initial jobless claims will be released on Thursday.
Friday
•The week will close out with the Labor Department releasing the month’s highly anticipated non-farm payrolls and unemployment reports.

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Weekly Wrap Up - Saturday, July 24, 2010

2010-07-24T13:45:00.000-07:00

Summing it up as only a Central Banker can, on Wednesday Federal Reserve Chairman Ben Bernanke turned the markets on a dime when he called the economic outlook "unusually uncertain." As the direct result of Mr. Bernanke’s comments on Wednesday, the markets declined on big volume after having rallied early in the session on "good" earnings news.

Don't be confused; there are more reasons to be very concerned out there than reasons to be bullish. Concerns to be evaluated include weak housing numbers, poor employment numbers, the European debt crisis, future dividend and capital gains tax increases, the record lows for the two-year yields-suggesting the bond market isn't buying into the economic recovery. And now, add the results of the European Bank stress test released on Friday, which though initially viewed as positive, will most likely put a damper on the start of next week. Give the traders this weekend to digest the validity and adequacy of the tests themselves and the number of banks that have been identified as troubled, as well as those which are just one step away from falling into that category. Undoubtedly, more questions will arise than have been answered. Nonetheless, if everyone else is worried about these same concerns, then the downside may have already been priced into the markets.

What is encouraging is the fact that at the close Friday all five of the market indexes in the AAS Traders Model closed above both their respective 50 and 200 day moving averages. However, the past week’s rally was not sufficient to bring the 50 Day averages above the 200 day averages. All five members are now rated as AAS Buy by the Model. Our previously stated concerns about the global economy remain, but price appreciation is what matters, and this is a step in the right direction for the bulls.

Moreover, earnings for the most part have come in better than expected and the market is showing some signs of life.

For the week the DJIA gained 327 points (+3.24%) and closed at 10,424.62. The S&P 500 added 38 points (+3.55%) to 1102.66 while the NASDAQ added 90 points (+4.15%) closing at 2269.47. The Russell 2000 gained 40 points and closed at 650.65 (+6.60%) and the Value Line Geometric gain 17 points (+5.63%) and closed at 318.33. As previously stated all five members of this group are currently rated as a Buy by the AAS Traders Model.

To view enlarge image click on the image itself.

The market internals were positive. Advancing issues led declining issues by a 4-to-1 margin on the NYSE and by a 7-to-2 ratio on the NASDAQ, Friday. Trading volume averaged 85% of its yearly rolling average for the week and about 10% higher than the same week last year. Total Buy-Sell-Neutral ratings viewed by the AAS Distribution analysis are returning to the Mean and into more healthy territory.

To view enlarge image click on the image itself.

Over the past week, the markets traded within the Resistance – Support bands which were published in last week’s blog with a few minor exceptions. The Russell 2000 index, the largest by membership, evidenced the largest violation of the AAS Support and Resistance bands.

To view enlarge image click on the image itself.

While the AAS Major Market Model remains Bearish, the Sentiment component of that model turned Bullish as of Friday’s market close. We will be watching the remaining two components of the model in the coming week for signs of a potential change in overall direction. Remember, this is an intermediate term model and as such, will take longer to change direction than our AAS Traders Model, which is technical in nature and much quicker to change overall direction.

Be aware that despite last week’s gains, the market remains locked in a trading range which has existed since the May 2010 sell off. The technical condition of the market improved last week as evidenced by an uptick in the Momentum Index, the significant improvement in the MACD indicator and the positive divergence evidenced by the Vortex indicator. Additional positives include the improvement in the Stochastic indicator and the ability of most of the major averages to clear their respective 50-day moving averages.

To view enlarge image click on the image itself.

The negative side of the coin is supported by the fact that none of the five members of the AAS Traders Model have reversed the trend in their respective moving averages. That is to say, that the 50 day moving average is still below the 200 day average, and it will take some time to reverse this condition. The next hurdle on the Resistance side will be the June highs. The 200 day moving average and the June highs present key resistance points and until they are surpassed, the short-term direction remains down. Lastly, all five of the averages continue to carry Over-bought status.

Numbers to Watch:

To view enlarge image click on the image itself.

Industry Groups: Of the 26 Industry/Sector Groupings that we track, 2 are rated as a Buy, 22 are rated as Neutral with the remaining 2 being rated Sell. The previous week's totals were 1-11-14, all together reflecting a significant improvement in the technical condition of the markets. The following are the strongest and weakest groups for the period ending 07/23/10. Strongest: Global Telecommunications and Broadband. Weakest: Global Healthcare and U.S. Healthcare.

In the coming week, the markets will face three potentially rally stopping bullets amongst other issues. On the European front, the start of the week brings the first chance to react to the results of bank stress tests, which were released Friday after markets there closed. Other points of contention in a week filled with earnings and economic reports include data to be released on U.S. consumer sentiment and weekly jobless-claims numbers.
Monday
•We'll get several more glimpses into the minds of consumers this week, beginning with new homes sales for June on Monday. Sohu.com Inc.

Tuesday
• On Tuesday, we'll get the Case-Shiller 20-city home price index for May, but more importantly, the Conference Board's Consumer Confidence Index for July. If you recall, this index slumped badly in June.

Wednesday
• The market will be graced with the weekly report on U.S. petroleum supplies.

Thursday
• Weekly initial jobless claims will be joined by the Fed's Beige Book.

Friday
• On Friday, we'll get the latest numbers on second-quarter gross domestic product, along with the Chicago Purchasing Managers' Index for July, and a final look at July consumer confidence as measured by Reuters and the University of Michigan.

Suffice it to say, there will be a host of major earnings releases to digest in conjunction with the above major economic data.
The closing week of this month may, in fact, prove to be the most volatile trading week of the month.

Through our new Merchant relationship we are offering you the opportunity of receiving a one month trial subscription to the Alpha Advisory Service bi-weekly newsletter for the low cost of $1.00. If you are interested please view the special offering page by clicking the following link, AAS Special Offer.