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Superpicks 2012: +28.3%. Doubles IBD50 Top-10 performance.

29 Dec

The IntersectionX and Superpicks watchlists are up to date and may be viewed HERE.  There are only two Superpicks this week.  DDD drops as it is no longer rated #1 at Zacks.

Using consistent scoring from prior weeks, this is how our lists look.  It isn’t pretty after a good week last week.  The only ETF of the list we follow that was in the black last week was Emerging Markets, small caps, especially value, getting the worst treatment.  The IBD50 Top-10 list had 0% winners last week.  Usually this would imply an up week next week, however, with the short trading week and that fiscal cliff I am making no encouraging recommendations.

results

However, it should be remembered that we only started our Superpicks watchlist on week commencing 2/4/12. The numbers for all the other lists above are a full year.  If we make an like-to-like comparison, this is how the numbers stack up:

results yr

Those first few weeks of 2012 made a difference.  Our Superpicks have made 28.33% from inception which doubles the return from the IBD50 Top-10 for the same period.  As the Superpicks has fewer holdings, its volatility as measured by standard deviation is higher.  These numbers have no money management in them.  What is interesting is that the Superpicks have had a very few blow-out weeks driven by one stock (and a few sorry weeks driven by the same) which show how missing (or avoiding) those weeks could make a big difference.

For example on the week of 7/14, the Superpicks were up 15.5% on average aided by a 35% jump in Melanox (MLNX).  MLNX actually hit higher numbers during that week.  What goes up often comes down and MLNX is now priced lower than it was at the start of that week.  The worst week in the Superpicks was a -8.4% week the week of 10/13. In that week (yes it was MLNX)  Mellanox sold off 25.5%.  Align (ALGN) was close behind with a 24.3% sell-off.

To keep it simple, for those looking for timing signals (I happen to think trailing stops work well here, pick your own %age) consider being out of the market when IBD says the uptrend is under pressure and certainly be out when they say the market is in correction.

A quick recap on how we figure our numbers. Score is kept by Google Finance, Friday close to Friday close.  I use VectorVest quick tests for the index performance, same time period.  I average the +% and -% of each watchlist for the weekly performance.  The numbers of stocks in the IntersectionX and Superpicks changes.  These weekly averages are compounded weekly to arrive at the YTD performance. Others are simple averages — yearly and four week — of those averages.  It may not be perfect but it is consistent and, I think, resaonably indicative of the results an individual might achieve.

A happy and successful 2013 to you, the efforts of our elected representatives to the contrary nothwithstanding.

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Market commentary: Have we hit bottom? — IBD50, Stocktwits50, IntersectionX

17 Jun

Our IntersectionX watchlist and its related Superpicks has been updated.  It may be viewed on its page : http://paladinmoney.com/intersection-50/intersection-50-list/

Last week was the first week in seven when the four-week weekly average of profits and losses on the IBD50 and ST50 turned positive.  The broader lists both did better than their top-10s too.

If you had asked me two days ago, I would have told you that I thought recent bullish days were driven largely by speculation driven by expectations of more easing by national banks.  I may still have been right.  However as I write this it appears that the pro-bailout parties in Greece will get the first chance to form a government.  If this hint of stability is viewed bullishly, which I expect it to be, then we may see a short period of rising prices, particularly in the so-called “leading stocks” on our watchlists.

Be that as it may, the underlying situation in Europe remains troubling leading me to believe that caution should continue to be the watchword.

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A discouraging week. Are the Dogs back?

18 Dec

10% discount code PROTECTME5

Looking back a couple of weeks and the expression of my vain hope that the market had changed character for the better, it is clear now that  it was either a temporary respite or the markets had conspired to make an absolute liar out of me.  I suppose that it matters not other than to my ego, but we are once again in an unhappy place in the markets, where, apparently, we cannot hold an open to the upside.

Although my IntersectionX list (those stocks on both the IBD and ST 50s) held its own this week versus the other watchlists, the performance of the two main watchlists was pretty dismal.  The percentages of losers completely overwhelmed the winners.  12% winners in the IBD and 16% in the ST50.  The overall markets also bested not only the lists but also their top-10 choices.  The Christmas Silly Season is upon us as well, so I will be watching my stops like a hawk and sitting the rest of the year out, with the exception of monitoring opportunities in gold.

As I write, I am unseasonably pessimistic about the immediate prospects for the markets which I think may just give us more of the same with volatility.  It is time, I think, to dust off some of my options textbooks.  Otherwise, the sidelines are looking pretty good right now.

I have posted my thoughts on gold separately, so I will not repeat them here.  I will say that running through the charts of the commodity ETFs, it is clear that there are substantial opportunities building,  just not yet.    One metal that is attracting my attention for a future purchase is platinum.  I am not much interested in its industrial alternate, palladium, as I think there is too much retail interest in PALL which, in my opinion,  has recently contributed to its volatility.  Platinum is currently cheaper than gold and has sold off substantially this year.  It probably has some room to the downside but PPLT is on my watchlist. I check it every day.

Looking at our Vanguard ETFs which we use as proxies for various views of the market, our sector winners were certainly in the defensive end of the spectrum.  REITs topped the list and made a strong showing from Wednesday morning, adding 3.4% from Tuesday’s close:

The interesting action though, at least to my eyes, was in what I call the segments.  High yield dividend stocks were the clear winners and not by a small margin.   This is also apparent in my watchlist of dividend ETFs where ticker FDL, First Trust Morningstar Dividend Leaders ETF has lost least since December 7th, with Wisdom Tree’s high yield dividend ETF, DHS,  hot on its heels.  I started my self-directed investing life way back with the Motley Fools when they were pursuing a dogs of the Dow strategy, and I have been thinking for some time that that Dog may be about to have its day again.

Value is back in vogue on the style side. Looks to support the high-yield argument.

I may miss next week, so in case, a Merry Christmas to you all.

 

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Maybe the market has changed. List behavior is more normal?

4 Dec

It seems to me that the action of our watchlists — the IBD50 and Stocktwits50 — may indicate that the basic psychology of the market may have shifted some.  I’m not talking about the major move in the market that we saw on Monday or Wednesday:

Unless you had anticipated the large step-ups, especially on Wednesday, the action occurred outside trading hours and was next to impossible to trade.  Last week’s volume didn’t impress me.  Friday couldn’t hold its rally.  I will be delighted to be wrong, and could even argue for some more upside between now and year end.  However, I am not convinced we are out of the woods of headline-driven market volatility.

However, unless this last week was just a fluke we may have seen something of a return to normality in the behavior of the Stocktwits50 and the IBD50.  The numbers for the Fri-Fri week were:

  • S&P 500 +7.39%; NASDAQ Comp +7.59%
  • Stocktwits45 +7.74% 98%W; Stocktwits45 Top-10 +8.73% 100%W
  • IBD50 +7.37% 98%W; IBD50 Top-10 +6.68% 100%W

Best in the Stocktwits was ALLT (Allot Comm) +19.52%, in the IBD, ULTA +14.85%.

However, this is the first week since August 6th, bar that of October 8th, where we have seen a great proportion of winners in both the main lists and the top-10s.  In fact, the percentage of winners has been pretty paltry.  Since August, both in average and compound the S&P and the NASDAQ, have materially outperformed both the IBD and the ST watchlists.   The top-10s from the watchlists have also had a hard time beating their main lists too.  At risk of major understatement, the market has been, well, topsy turvy.

This week, the ST50 top-10 beat out the main list, the IBD top-10 was not left behind by much (the main IBD list has beaten its top-10 list two-thirds of the time since August 6th, which is not normal).  The ST50 beat the market averages and the IBD came close.

PLEASE NOTE:  I am NOT saying that all will be plain sailing from here on, or that it’s straight up from here.  But what I do hope for is somewhat more normal behavior from the market components.  While volatility is hard to deal with, a manic market is just not something to work with.  Let us hope this week is pointing to more normal behavior.

On the broader front, using our Vanguard ETFs as proxies (energy, small caps and emerging markets):

 

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Not much giving from the market this Thanksgiving

27 Nov

10% discount code PROTECTME5

There is no other way to describe this last week in the markets than quite ugly, thank you.  The S&P lost 4.69% for the week, the NASDAQ composite 5.09%.  Our watchlists returned as shown.  I can say I did not bother with the random selections this week.  When only two of the IBD50 issues (DLTR, SWI) and four from the ST50 (HITK, MWE, GMC, SWI) are up for the week, the results would have been rather moot.  I will re-start the test when we have a more long-friendly market.

Going back over the last two weeks looking for lessons in this turbulent market, and having watched my stops notch down until they hit — although I still have positions in my long-term taxable portfolio — it looks to me as if November 16th was the pivotal day.  The 17th would have been the confirming day. Using VTI and SPY as market proxies, I had a confluence of several indicators either pointing down or rotating down that day and it is a perfect storm I will not ignore again.  To put things into perspective, since then, the S&P is down 6.33%, The NASDAQ composite, 7.5% and the Wilshire 5000, 6.51%.    These retreats are not chump change.

Most folk should probably be on the sidelines at the moment.  I do not short individual stocks, but even going short through inverse ETFs or index puts may be fraught with peril.  Unless you are tied to a monitor all day I would definitely stay away from leveraged ETFs, inverse or long right now and definitely hold for only a day at a time, using sell at close orders to clear the decks each day.  The market is headline-driven, volatility rules, and intra-day volatility can be significant.  Stops are becoming hard to manage too.  While the inclination is to tighten, that just increases the chance of being whipsawed in this market.  As I said last week, if you feel you must invest at the moment, conservative position sizing is the only way to go.

Following is our sector, segment and style analysis using Vanguard ETFs.  No winners to be had but in some of the analyses there was a big difference between the best and the worst last week.  Notably in sectors where Energy was down over twice as much as the “defensive ” Consumer Staples:

Elsewhere in the segments and in style the “what” was less important than the size, as you can see:

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Watchlist woes, which way will the market go?

19 Nov

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Before we look at the watchlists and other sector and segment results for the week let’s play with our opening question for a few minutes.  The chart to the left is of the SPX, the S&P500 index.  Other broader indices project similar wedge formations.

In the case of the S&P we may observe that the index was never able to convincingly break through resistance formed by the 200-day SMA — which is still descending, by the way, albeit very gradually.  The wedge pattern indicated that a break up or down was likely and the index broke to the downside.

Currently we are seeing support at the 38.2 retracement from the October rally.  Friday’s candlestick shows a small attempt to rally, but is really a day of indecision.  We will see if there is a rally to be had but my personal opinion is no.  If we penetrate and close below the 50-day SMA, I am not sure what there is to stop the market moving significantly lower.

My sense is there is just so much uncertainty, both in Europe, and with the political brinkmanship coming from the super committee, that it is just going to be easier for the market to fall than rally.  Profit numbers be damned, I just think the majority is focused on the negative.

I might add that while many consider it unlikely that the European situation will not fall apart, all is not plain sailing.  While we should see a conservative PM in Spain this weekend, my Spanish friends tell me that Germany in the shape of Chancellor Merkel is seen to be meddling in Spanish affairs and they don’t like it.  It may be what it is today, but my sense is there will be a price to be paid for the ill-will that the Germans are generating.  Even if they are the one picking up the bar tab for everyone else’s parties.  On to the watchlists:

This week, I stopped running the VectorVest filters against the IBD50 and Stocktwits 50.  I haven’t found them to offer a performance to the upside or a protection to the downside that made it worth my time to calculate them.  I was somewhat tickled then , to see both my random selections make it into the top three.  This was not because I necessarily lucked into winners (although Healthstream helped the random ST50), more that I missed the big losers.

We will talk about them more later, but Rambus really killed the IBD this week with a loss of over 50%.  Unless I missed one, Herbalife is the only stock to the upside in the IBD50 this week.  Stocktwits did better with 24% of winners, but still was hurt by a significant loser in Deltek, down 22%.  Tesoro was also down 16%.

At risk of stating the obvious, it is hard to make money in this market….

Looking at our sector chart everything is to the downside with the usual defensive suspects losing least:

In the segment analysis the dividend ETFs have drifted to the top again, no surprises there:

In terms of style, you can see that, using Vanguard’s ETFs as proxies, there is little chose between value or growth, big or small:

Rambus (RMBS), number 50 on last week’s IBD50, is a study in why we should place stops on every single position we own. Although in this case it may speak more to parsimonious position sizing than anything else as I’m not sure stops would have helped.  RMBS just gapped down like a monster near the close, preceded by a halt to trading, so in this case my guess is most investors took that one accross the shins:

By the way, as a study in how holding on hoping a good stock gone bad will eventually come back? Rambus ain’t it:

In the case of the Stocktwits loser ‘o the week, Delek (DK), stops would have worked to protect a position AND there were plenty of augurs in the technicals to suggest that something less than stellar was on its way.  Easy for me to say at the right of the chart but here is how it looks:

Delek is another stock that has never recovered from 2007/8 and is now less that 50% of its 2007 high.

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Market motions: almost impossible to follow

13 Nov

10% discount code PROTECTME5

In last week’s post I asked if we were in for a roller-coaster ride this last week.  With the value of hindsight my question was apparently predictive.  Were it not for Wednesday, I think we might write this week down as a win, and indeed, if measured by the S&P500 we were up for the week.  However, end of week volume was thin, and I think it’s fair to call the market nervous, still.

To recap, we compare from Friday close to Friday close the results of the IBD50, the Stocktwits 50 and the top-10 selections of their publishers.  We also run filters to produce 10-stock watchlists using two of Vectorvest’s proprietary indicators, VST and RT against the full watchlists.  We also make a ten-stock selection at random.  So far this project has been a disappointment.  It may just be the way the two underlying watchlists have behaved over the last twelve weeks, but more on that later.

This week, once again the IBD50 outperformed its top-10 as nominated by IBD.  Since August 6th, the IBD Top-10 has underperformed the full list 64% of the time.  However, over the same time period this list of “leading stocks” has only beaten the market (defined by me as a simple average of the S&P500 and the NASDAQ composite) 43% of the time.  On a weekly compounded basis the “market” is up 6.8% for the period, the IBD50, 1.52%.  The IBD50 Top-10 is actually down 5.02%.

The “momentum” stocks represented by the Stocktwits50 have no room to feel smug either as they are doing less well than the IBD50′s “leading” stocks.  The ST50 has been beaten by the market ten out of fourteen weeks, but the Top-10 list has beaten the full list 57% of the time.  However, again on a weekly compounded basis the ST50 has lost 6.97% and its Top-10 list has lost 4.87%.

Although no money management has been employed here, these are not exactly stellar results from lists that we typically expect to outperform.

If you want a final graphical example, the equity graph of our IBD50 Top-10 portfolio is illustrative:

Although our portfolio is up 10.65% since January 24th (inception) versus  decline of 1.33% from the S&P ETF SPY, it has hardly been reaching for the starts since its recovery from the late September/early October lows.

If the IBD and ST lists might disappoint, they have the over-riding benefit of being free.  The same cannot be said of VectorVest’s indicators, which aren’t knocking the cover off the ball when it comes to the IBD and ST50s either, although they are ahead by a nose.  I started running these filters on August 20th.  The VV VST indicator has beaten the IBD Top-10 selection 50% of the time, the RT filter 42% of the time.  Versus the ST50 Top-10 the filters do better and beat the Top-10 list 58% of the time each, but not in the same weeks.  However, neither pay-for-play filter beat the dartboard, or the electronically generated version thereof.  The random IBD10 beat the IBD Top10 63% of the time, random beat the ST50 Top-10 67% of the time.  However, tracking all these filters and the Top-1o lists over the same time period from mid-September, none of them returned a profit on a weekly compounded basis.

Now, it may be that you can’t make a silk purse out of a sow’s ear.  The underlying watchlists didn’t outperform the “market” after all.  But the paid filters aren’t really additive either.  It may just be they don’t work well on the securities in these two watchlists.  But I had hoped for better.  Long story short, stock picking isn’t winning right now.

In the broader markets measured by Vanguard’s sector and segment ETFs, defense was the winning game.  Health Care and Consumer Staples topped in the sectors with the dividend ETFs leading the segments:

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Markets change in the last week of October

28 Oct

10% discount code PROTECTME5

I will take the applause for the prescience of my “Oh death, where is thy sting?” stab at NFLX last week when the stock rewarded its desperate diehard stockholders and speculators by dropping to the high seventies in dollar terms from where it has since mounted a stunning comeback to $84.14.  I am so glad I did not pay $304 for that back in July, just a few short months ago…..

Moving right along, this week’s market has been, to my eyes, rather different from the week before.  The IBD50 and Stocktwits 50 watchlists that we follow again challenged and beat the underlying major indices this week, which hasn’t happened for several weeks.  Smaller caps and Emerging Markets started to sprint, too.

The ST50 Top-10 picks made the top of our list by a significant margin this week thanks to stellar performances from Questcor Pharma +21.6% and Stamps.com +31.6%.  We see the proprietary VectorVest VST sort appearing in the higher portions of the list too.  Both our random picks placed about half way up the list.

Making money is always good, no worries there.  I do think I would rather have steady and reliable returns from a stock-picking tactic than occasional blockbusters as the big ups are sometimes replaced by the big downs, as we saw last week.  As I have written elsewhere, if one can consistently make and compound 1% a week, the annual upside is quite impressive. That said, good calls from Ivan this last week which let the higher-ranked stocks outperform in the ST50.  The top 10s haven’t done especially well versus their main lists lately.

In the secitors, using Vanguard’s sector ETFs as proxies, materials was the big winner, followed by… REITs of all things.  I would still not touch Financials with a ten-foot pole, even if others apparently will.  Energy continues strong.

In the segments you will notice that dividend payers did OK but are at the bottom of the list.  Emerging Markets came back hard this week +9%, thank you.  Otherwise it’s the smaller caps that are doing the heavy lifting this week.  Please also note that the equal-weight S&P500 ETF beat its cap-weighted big brother by 25%.  That is not exactly what you call chump change, Ladies and Gentlemen.

More later.

ST50, IBD50, INx watchlist and portfolio update. ULTA pops.

9 Sep

When we look the performance of our benchmark indices this week, it is clear that different segments of the market are not moving in lockstep:

  • NASDAQ 100:  -0.50%
  • NASDAQ Composite:  -0.19%
  • DJIA: -2.21%
  • S&P500:  -1.68%
  • Russell 2000: +1.69% (yes, that’s over a 3% delta to the S&P500)
  • Wilshire 5000: -1.55%

Maybe we are seeing the impact of the poor performance of some of the larger financials here, but I should tell you that comment is based on supposition, not research.  Keep these numbers in mind as we review our watchlist and portfolio performance.  All numbers from Friday night to Friday night.

Also looking back to last week it appears my comments about the Swissy and Europe turned out to be somewhat prophetic.  I wish I could pick stocks with such accuracy.

Our monthly IBD 50 Top10-based portfolio rose 3% to $53,919, helped as we will see by a holding of ULTA.  The INx portfolio fell 1.08% to $99,811.  The ST50 Top10 weekly portfolio was up 1.92% to $105,695.

From the watchlists the IBD50 Top10 has it this week with a 3% hike (8W2L) largely on the back of a 23.71% leap from ULTA.  The full list was up 0.72% with 24W26L.  The ST50 Top-10 gained 1.11% also with 8W2L.  RIC +8.02% and CVV -8.97% bracketed the list.  The full ST50 list gained 1.04% 32W18L.  The IntersectioNx list gained 0.10% 6W4L.

As we saw last week with MITK, one stock can make a huge difference to watchlist performance.  Last week the beneficiary was the ST50, this week it’s the IBD50 and the stock is ULTA which leapt on better earnings.  Talk about a news driven market and any port in a storm:

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Watchlists updated

4 Sep

The week’s changes to the watchlists we track have been updated on their appropriate pages.

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