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 3rd 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 26th. 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.
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