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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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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

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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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IBD50, Stocktwits50 mid-week notes with market commentary

13 Jul

10% discount code PROTECTME5

Performance noted is from market close Friday to conform to other market commentaries.  Since then the S&P500 is down 1.9%, with the Wilshire 5000 down 1.94%.

The stocks currently in the IBD50 are down 2.15% with 13 winners and 37 losers.  While ARUN managed to drop 10.09% in those three days, a few stocks have done well:

  • FOSL +3.15%
  • TNAV +2.98% ( a strong newcomer from two weekends ago)
  • CHSI +2.96%

The Stocktwits 50 lost 1.73% with 7 winners and 43 losers.  Worst was a stock from the Semis, IPGP, -5.96%.  The winners are led by an auto dealer, Lithia:

  • LAD +3.62%
  • FOSL +3.15%
  • ELN +2.75%

The IBD top 10 stocks has three winners, seven losers and a 1.24% loss.  The usual suspects, FOSL, NFLX, LULU leading but ULTA dumped 5.57%.  Our Intersection list from the IBD50 and ST50 has 4 winners and 13 losers for a loss of 1.74% so far.

I liquidated my portfolios (mostly) on Monday morning.  Some had hit their very tight stops on Friday.  For two weeks of partial invested I left with decent numbers to the upside.  I was not tempted back in today.  As I write this the futures are down a tad, courtesy of Moodys (Am I the only person tiring of the rating agencies wandering around like Banquo’s ghost? Even if they partially or wholly right?) but that can change over night.

I am personally wary of investing in equities this week.  The VectorVest market timing indicator dropped 0.15 on Monday, and has continued downhill since albeit at a more gentle pace.  I do not usually see the MTI take that sort of hit without continuing to head South for a while.  I will wait to see a turn before the order pad comes out.  I also look to my notional top-10 IBD50 portfolio for guidance.  It has recovered a lot of what it lost on Monday but I think I will combine a turn in the VV MTI and my IBD portfolio making a new high before I make any new equity purchases.

Please note I said equities.  If Kitco shows prices doing well in the morning I will make additional gold purchases and may re-enter the silver market for the first time since I exited at the peak
[Most Recent Quotes from www.kitco.com]
[Most Recent Quotes from www.kitco.com]

Silver is looking interesting again.  I may set a conditional order to execute above somewhere around the $39 mark.  We had a nice gap up today on better volume too.  Let’s see if there’s a follow-through.

In closing, I might say that this type of market is tailor made for the product from one of our partners, Smartstops (click on the image at the top of the post).  Their low-end offering can be had for the price of a stock trade a month and it’s a good backstop and watchdog.

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