Saturday January 17, 2015

$SPY, $STUDY, Alpha One Model had a profitable week albeit on the back of Options trading, but in general the equity holdings and the portfolio process are working as detailed in the Alpha Process document.  The system continues to downgrade names on technical weakness and they are then closed out.  The exposure is limited to approximately the level of the recommended allocation levels which remain at 62.5% Long and 37.5% Cash.  While the portfolio is at little less than that level currently, we may add either $CAVM or $CTSH from the Watch list in the coming week, should the major’s react positively to the forth coming earnings releases.  The $AAPL position will be closed this coming Tuesday as the Opinion was downgraded Friday.

As crude oil prices continued to rise steadily throughout Friday’s session, stocks followed. There are some indications of positive divergence developing between the price levels of the major indexes and their technical indicators. With oil prices stabilizing, we are likely to see higher prices in the near term while volatility retreats.

However, the markets will remain volatile going into the shortened trading week and the probable direction for the major averages over the next few weeks is most likely lower. We have a busy earnings report week coming up, so remain nimble as it is going to be a stock picker’s market.