Saturday March 28, 2015

$SPY, $STUDY,  Friday’s gain gave the bulls a thin string to hang on to as we closed out an otherwise tough week. The Alpha One model gained 1.67% for the week and has again maintained its Y-T-D appreciation do to the Options Trading activity this past week since the equity holdings did decline slightly.  The S & P 500 appears to have given back the majority of the year to date gain now at 0.10% for the year whereas last week the index had an appreciation of 2.39% for the year.  Take a look at the holdings page for the both the Alpha One and the Alpha Two models for comparable period returns.  I remain too modest to write about them here.

The market may be stewing about the upcoming earnings season which starts in about two weeks. Before then, the March jobs report which is due out next Friday will truly be the only major data release for the coming week, which will be a short trading week with the market closing for ‘Good Friday’. Technically, momentum is bearish while volume is drying up. As long as the S&P 500 holds its 2040 support level, expect more lackluster sideway moves. We remain partially committed in the equity portfolio at around 40% long.  The Asset Allocation models is reading at 62.5% long and 37.5% cash.  There are some very attractive names on the Watch list including SBUX and BIIB, but with the quarter end in front of us and only news to trade on in the coming week I will remain light until a firm indication of direction is forth coming.

Saturday March 21, 2015

$SPY, STUDY, Another strong week for the Alpha One Model, no additions to the holdings in this equity portfolio but a nice gain in the accrued market value of the portfolio holdings, up $1,521.62  or 4.78% for the week, while the Options Trading added $3,950.56 on average invested capital of $10,086.90 or a 39.17% gain on trades. Again, not something everyone can or should do, but with a little work and discipline it is well worth the time and effort.

An overall strong performance among the small and mid-cap stocks suggests that there could be more upside to come for the overall market. However, don’t get carried away. There are some negative divergences between the prices of the major indexes and their technical indicators. The shorter term Market Model shows 3 of the four member caring Sell recommendation and the recommended Asset Allocation level remains at 62.5% Long and 37.5% Cash. With nothing but news to drive the markets for the next few weeks it wouldn’t be surprising should bulls take a rest as the S&P 500 approaches its record at 2117.

Saturday March 14, 2015

$SPY, $STUDY, life is good albeit in fits and spurts.  The past week saw the holdings of the Alpha One Model reduce in number to 8 or 33.5% long versus 66.5% Cash.  The gain Year-to-date is holding up very nicely at 58.62%.  The gains are consistently coming from both the portfolio holdings up 11.4% thus far in the first quarter.  With the lion share of the profits continues to come from the day trading or hedging activities which I under take using the $SPY.  Those activities have contributed $28,331.08 to the portfolio.  While not for everyone, nor should it be, learning to trade options can certainly provide both piece of mind and profitability to one’s portfolio.  See the “Closed Options Trades” tab included in the Alpha One Model, found by clicking the first item on the menu bar above, for details of the trades. 

Remember that the model is just that a model, scaled from my accounts, to a proportion that in my opinion would be suitable for an investor to begin thinking of trading in this manner. The price detail of each transaction booked in the model is derived from real time trades in my accounts. This modeling is being done solely as an educational service.

Three portfolio positions were closed over the past week $VRX, $ORAN and $DAN all as the result of opinion downgrades. Given the volatility in the market driven by the ever changing speaking faces needing to sell sound bites to survive and the short calendar remaining before we approach earnings season again, I chose not to fill the void created by the sales and focus on trading options.  There are three names on the Watch list for your perusal, but here again I advise to measure twice and cut once.  The coming weeks will be highly volatile with little to move them in either direction than news mongers.

Friday wasn’t a pretty day in the stock market but irrespective of the larger indexes small cap stocks continued to outperform. The short term momentum of the Russell 2000 index remained bullish, suggesting that the force behind the recent drop in stock prices was mostly the rise of the dollar. All eyes will be on Janet Yellin and the Fed in the coming week to see whether together they can help the market by releasing some pressure from the dollar. An indication of a June rate hike will probably send stocks into correction territory while keeping the “patient” in its statement will likely put an end to the current down leg in the stock market. Expect volatility to remain high until we get a good picture from the Fed on Wednesday.

As shown below the Asset Allocation Model is recommending 62.5% Long and 37.5% Cash.  This recommendation is confirmed by the 67.5% Long status taken from the individual daily analysis of the names included on the various personal lists which I maintain.  The short Term Market Model is at 75% Bearish, 25% Bullish.  That Bullish call is on the Russell 2000 by the way.  Caution should be the tone of the day!

Remember that the daily posting has been discontinued for the time being, weekend updates will continue at my convenience. 

Saturday, March 7, 2015

$SPY, $STUDY, Bears now have the short term momentum. However, Friday’s decline was a knee-jerk reaction to price in a June rate hike by the Fed. The longer term trend is up and it doesn’t look to be in danger at this juncture. This series of pullbacks, like many others we’ve seen in the past several years, is likely to provide investors with a new entry point.

An interesting article in the recent Business Insider blog by S&P Capital IQ's Sam Stovall “Happy birthday, bull market!"   On March 6, 2009, the S&P 500 hit an intraday low of 666.79. On Friday, the bull run's sixth birthday, the S&P 500 opened at 2,100.99 – an impressive 215% gain. "Only three [bull markets] since World War II have lasted this long,"  My calculations for this period are comparable, which produce an annual rate of return of 13.18% p.a. slightly higher than the 50 year average total return for the S & P 500. Thus the markets have enjoyed a real nice recovery since the let down of 2008-2009.  Is it done?  Most likely not.

While our short term Major Market signal has gone Bearish as of Friday’s close, this is a very fast reaction to Friday’s trading and is subject to an equally fast reversal.  The Intermediate Term Model remains bullish with the Asset Allocation recommendation constant at 75% Invested and 25% Cash. 

Our Alpha One Model did not trade over the prior week and continued to hold the eleven positions at a 51% long position.  There were two profitable options trade last week which offset the week’s modest decline in the accumulated equity holdings appreciation year-to-date.

There was a change in my life beginning this past Monday which will impact my blogging frequency.  Monday, I joined brandsymbol as an Account Manager and had a very fun filled week I am pleased to report.  At my age coming out of retirement was not easy, but both Gail and I had been looking for more to do in our lives, and the opportunity to join Clayton Tolley, President and CEO of brandsymbol, who is a long-time friend, along with his crew at brandsymbol was too good an opportunity to pass up.  More on this in further postings, but for now just be aware that I will post the weekly Alpha wrap up on Saturday as I have in the past but will not be posting my daily trading activity to either the blog or the other sites which you may have formerly been gleaning the information from.