Monday September 29, 214

$SPY Re-Read Saturday’s post, if you missed this one seek alternative guidance. 

Wall Street Breakfast: Billions Withdrawn From Pimco Following Gross'sDeparture 

"Stock futures lower; investors watch Hong Kong unrest" - 

Economists slash Q3 GDP forecast, see growth ahead

Reports: Regulators deferred to Goldman Sachs

Saturday September 27, 2014

The markets rebounded Friday after the big sell off on Thursday. Investors were happy with an upward revision to Q2 GDP and a decent September Michigan sentiment reading. Strong earnings reports from both NKE and MU also helped eliminate some concerns over up-and-coming Q3 earnings season. Internet and energy shares led the rebound.

The bounce allowed investors to breathe a sigh of relief as it indicated there are still buyers out there. Stocks may continue to be volatile but downside is likely to be limited at least on a short term basis. With that said, the short term Market Model remains solidly in a Sell mode, the recommended Asset Allocation range crept up slightly to 37.5% Long and 62.5% cash and with the refreshing of the Master List the overall evaluations of the names which I follow also improved.

This latest bounce wasn’t a strong one as small and mid-cap stocks lagged and the market internals weren’t as impressive as the moves by the three major indexes would have suggested. It will take a solid upside follow-through on Monday to turn the short trend back up.

Going into the coming week we will be watching the highlighted names on the Watch List for possible Buys but I will not chasing anything aggressively. Remember we are nearing the end of the 3^rd Quarter and much window dressing will take place while the main driver in the market will be news from random sources as Earnings Season will not reconvene until mid-October.

The gains in the past week in the Alpha One Model Portfolio came solely from my day trading activities using Options on the SPY.  I typically trade in this manner to hedge my holdings when market corrections are evident.  This type of trading is not recommended for the average investor and should only be undertaken after much discussion with your financial advisor or trading consultant.

The “Master List” which drives the portfolio process has been updated and the new list has been put in place at the close of trading September 26^th.   The report now includes an additional tab “Groups – Master List” here you will find the appropriate categories of Industry Division, Group and Sector for the members of the Master List for your reference. 

FactSet Street Account Summary - US Weekly Recap

Friday September 26, 2014

The big selloff today following a decent rally on Wednesday’s showed that action was just an oversold bounce and the short term trend is down. Should this pullback follow the pattern of the three corrections we have had this year (late January-February, April and late July-August), it probably won’t stop until the S&P 500 gets to its 100-day moving average which is currently at 1954.

We could get an intraday bounce Friday, but today’s steep decline in the morning caught many investors by surprise. It will probably keep many buyers on the sideline until there is a clear signal of a bottom.

I have not been active in the Alpha One Model as indicted in my previous posting. No sense chasing ghosts into the quarter’s end.  However, that is not to be read as though I have been on the sidelines playing golf or reading good books, to the contrary I have been trading both Put’s and Call’s on the SPY each day to hedge the year-to-date portfolio gains. 

Last evening after the Close the short term market models were all in a Sell mode while the recommended Asset Allocation level had decreased to 25% Long – 75% Cash.  Caution is the word of the day.

Cashin: What could bebehind the selloff

Wall Street Breakfast 

Small-cap retreat: Anominous sign or no big deal?

The bulls are back, but theselloff may not be over

Saturday September 20, 2014

First, the market continued to get narrower with gains led by larger stocks which make up the large-cap indexes while the small and mid- cap stocks did poorly. The Russell 2000 has been down for three straight weeks while the S&P 400 was down for a second straight week. Secondly, the market internals have been deteriorating. After reaching a high in early September, the NYSE advance/decline line has been sliding and currently shows no signs of reversing that downtrend. Finally, new 52-week lows on both the NYSE and the NASDAQ have been expanding and are now at the highest level since early August.

For the broader market to continue to climb higher, those negative divergences will need to catch up soon. Until we see that happening we will remain conservatively cautious.

Going into the coming week we will be watching the highlighted names on the Watch List for possible Buys but I will not chasing anything aggressively. Remember we are nearing the end of the 3^rd Quarter and much window dressing will take place while the main driver in the market will be news from random sources as Earnings Season will not reconvene until mid-October.

The “Master List” which drives the portfolio process is in the process of being updated and will be put in place at the close of trading September 26^th.  The update will be included in next Saturdays Model Portfolio update.  There are several names in the current portfolio which do not appear as of now to be making the cut.

The names which I will be watching in the coming week include but are not limited to the following:  Apple Inc. ($AAPL), Aetna  ($AET), Avago Technoligies ($AVGO), Enterprise Products ($EPD) and Targa Resources PTNR ($NGLS).

FactSetStreet Account Summary - US Weekly Recap: Dow +1.72%, S&P +1.25%, Nasdaq+0.27%, Russell (1.18%)

Friday September 19, 2014

$SPY The markets have improved over the past two days and are in good technical condition for more upside as three of the  four majors which we model have returned to Buy status.  However, the market internals continued to be not as strong as the gains in the major indexes would have suggested, and small cap stocks lagged again.

Tomorrow is a quadruple witching day which will bring heavy volume along with higher volatility driven by the highly anticipated Alibaba IPO which has been priced at the top of the range.  It most likely will stir up the whole internet sector, taking other stocks in the sector for a wild swing.

U.K.Stocks Advance as Scots Vote on Independence

Wednesday September 17, 2014

$SPY The bankers have the markets in their hands. Besides our Fed, reports of capital injection by the China central bank to five largest banks in the country also helped stocks rally yesterday. Technically, 2000 is still the level to watch for the S&P 500. While we await the Fed decision, we may need to ask ourselves should the market be certain that the Fed is on the path of raising interest rates, does it truly matter whether it is three months earlier or three months late?

After yesterday’s sales on opinion changes for $HLX and $HAR I am at 43% invested in the Alpha One Model Portfolio, a little less than the recommended level but with it being September and the news to yet come later todayI am not going to push.  Art Cashin's comments below are worth paying attention to in my opinion.

'Death cross' looms? Russell 2000 a concern: Cashin

"BlackRock calls for U.S. stock market reforms"

Three 'Rs' that could send bull market to new highs

"World stocks hit one-month low, focus on Fed" 

"Fed change unlikely to blunt equities' appeal over bonds"

Wednesday September 10, 2014

$SPY The market looked like it was finally going to roll over today, but stocks had a decent bounce back , leaving the major indexes in the ranges they have been stuck in since late August. Volume has been light, indicating a lack of momentum in both directions. It is a stock picker’s market as the broader market waits for a direction. Be selective and stay nimble.  My Asset Allocation Model has moved back to 62% Long and the model is at about 50% Long at this time. 

The daily analysis which I do covering my personal lists plus lists of various bond, domestic sector and global sector EFT’s  has continued to indicate that caution remains the better part of valor and the tape does not lie. Only 52% of the names are currently rated Long.

This is a difficult month to trade in, always has been for reasons mentioned earlier in the week, so be cautious and don’t take unwarranted risks.

Tuesday September 9, 2014

$SPY Sold $APC at the open this morning, Opinion Changed to Neutral as of yesterdays close.

Please note that the Alpha One and the Alpha Two Model portfolio spreadsheets which can be viewed by clicking the link above are updated each weekend.  This coming weekend however I will be away and will update upon my return early next week.  I will be available by email should there be any questions and will attempt to post while away but can not make any promises.

Monday September 8, 2014

$SPY I will be actively seeking exit points today for $MU, $NFX and $XEC in light of their respective recent opinion changes and the light economic calendar thus coming week. As earnings reports wane, geopolitical along with Central Bank news will carry the market until early October. This scenario along with publicly trade funds (Mutual Funds) doing some portfolio dressing in anticipation of their October year end will serve to increase day to day volatility. My objective is to remain partially invested in accordance with the Asset Allocation Model and protect the year to date portfolio gains which I have garnered.  No sense in taking unnecessary risk with little or no upside. At approximately three times the markets gain this year I am content with both balance and performance in the Alpha One Model portfolio.

The cash generated by the anticipated sales mentioned above will reduce my equity exposer to around 54% Long and this along with my day to day options trading will most likely be sufficient until after the November 4^th  elections.



Goldman Sachs gets bullish again on stocks

"Scotland split jitters send sterling to 10-month low" 

"IMF's Lagarde urges Germany to spend more, aid recovery" 

Scottish Independence Looms as Iceberg Moves Toward U.K. 

S&P 500 Beating World Most Since 1969 Doesn’t Spark Flows 

U.S. Index Futures Little Changed With S&P 500 at Record 

Saturday, September 6, 2014

$SPY The rule of the day is don’t fight the tape or the central bankers. There aren’t many bears left as the Investors Intelligence’s advisor sentiment readings showed bears dropped to 13.3%, the lowest level since 1987. But there are still many investors in the correction camp. There is still sideline money waiting to buy any pullbacks. So the uptrend is likely to stay intact at least in the near term.

With that said, although stocks posted a record close Friday, the 10- year treasury yield, which dipped in the morning after the payroll data, actually settled the day higher. What direction will the Fed take following this data; we’ll have to wait for a couple of weeks to find out when the FOMC holds its next meeting in mid-September.

This coming week I have some cleaning up to do in the portfolio, there are now three names with downgraded opinions and will need to be replaced.  The three in questions are $MU, $NFX, $XEC.  Candidates for replacement will come from the Watch List which is part of the Alpha One Model Portfolio and can be reviewed by clicking the above link for the Alpha One Model Portfolio.

FactSet Street Account Summary

Consumer Discretionary EarningsGrowth for Q3 in the Basement Due to Pulte Group

Friday September 5, 2014

$SPY The Bulls continue to appear to be losing momentum, but for now, it is just an overbought pullback. The uptrend doesn’t seem to be at risk at this point. Thus far two of the three trading sessions this week have ended as Distribution sessions, a troublesome indicator.  A weak jobs report could potentially be good news for the market. In the meantime, the S&P 500 has been down three days in a row. It hasn’t had a losing streak longer than that in 2014. We’ll see whether it can keep that track record going today

Rogoff: US economy is tighter than you think

Gartman warns on lack of conviction in markets

10 stocks burning past the competition


"Solid U.S. employment growth eyed in August"

Stocks: 4 things to know before the open

Stock futures cut losses on Fed view of jobs data

Thursday September 4, 2014

$SPY The market remains in an overbought condition while for the past two days in a row the S&P 500 has reached a new record during the day but finished lower. It suggests that the bulls are a little tired. It will take more pullback/sideways moves to work off the condition. Today’s decisions by the ECB should add some momentum to the Bullish camp.

With the ECB decision behind us the remaining cloud on the horizon today is Job’s data which thus far does not provide additional comfort as to the status of the U.S. recovery. 

Today, I will continue to focus on both $LUV and $CAVM for possible trades.  There have been no additions to the portfolio this week leaving my allocation at 60% Long below the recommended level of 75%. 

Correction coming? Pro says market run isn't over

Pressure's on for ECB, Bank of England

Global stocks bounce on sign ECB could launch ABS program

Futures higher ahead of ADJ jobs, ECB 

Draghi: ECB to purchase asset-backed securities

ECB cuts key interest rates

Wednesday September 3, 2014

$SPY The recommended allocation range expanded yesterday to 75% Long and 25% cash. I will continue to watch $ACT, $AVGO, $CELG and $LUV for possible purchase.  

The following piece on CNBC of Sam Zell is worth paying attention to if for no other reason than Sam over the years has been right many more times than he has been wrong. 

Sam Zell: Stock market correction coming

Futures higher on Ukraine, Russia optimism

 New Beheading Video Spurs Calls for Global Response 

And this is why I do not do emerging markets, this type of behavior is inevitable and undetectable by the non-resident investor.

Anonymous says Chinese chemical company is 'a massive fraud

Click on the following link for additional detail on the Alpha Model Portfolio.

Be sure to review the Alpha Disclaimer page prior to taking action any personal investment decisions.

Tuesday September 2, 2014

$SPY September will most likely start off slow while gradually picking up momentum into the later sessions of the month. I will be watching $ACT, $AVGO, $CAVM and $LUV as possible additions to the portfolio should the allocation recommendation increase or as a possible replacements for $XEC should it break down in the near further following the recent change in Opinion.

"Futures inch higher ahead of manufacturing data"  

"Risk appetite flickers in Europe, ECB speculation holds downeuro" 

Here’s Why Morgan Stanley Says S&P 500 May Reach 3,000 

Click on the following link for additional detail on the Alpha Model Portfolio.

Be sure to review the Alpha Disclaimer page prior to taking action any personal investment decisions.