View detail HERE

The IntersectionX and Superpicks watchlists are up to date HERE.

The so-called momentum stocks crushed it last week.  Our sole Superpick, MELI, was up 16.44%.  The IBD T10 ratcheted up 8.75%, the highest weekly gain since we’ve been tracking its performance, amply assisted by GMCR which hiked by a third!  All IBD T10 stocks were up which usually leads to a pullback, but the wind is behind stocks just now so maybe not.  For the week, using the Vanguard ETFs we track, Cons Disc, Industrials and Small Caps led for the week.  But there is broad strength, VTI, total stock market was 5/13 sector ETFs tracked.  That said, all the major indices were blown away by the momentum stocks.

I am somewhat on the rack about market direction.  A fool fights the Fed, they have more money than me.  But when I look at economic analyses such as those offered by Shadowstats, and in particular REAL estimates of intermediate and long-term unemployment of slightly in excess of one-fifth of the US population, and stagnating consumer credit (excl student loans, the blight of our society and the next bubble, IMHO) it is hard to be optimistic.  But for no w it is hard not to jump aboard this runaway train.

In closing I wish to record my regret at the passing of Alan Abelson this week.  His writing was of extraordinary quality, and I always enjoyed his dry observations whenever he used to appear on television.

The IntersectionX and Superpicks watchlists are up to date HERE.  For the year, the full IBD50 and Stocktwits50 watchlists, compounded weekly and with results calculated Friday close to Friday close, have gained 15.48% and 12.78% respectively.

On July 4th last year, I wrote a fairly lengthy piece about Liquidity Services Inc (LQDT).  That piece is still worth reading as background, as most of my comments still apply.  In that piece I wrote:

Pricing on LQDT?  Clearly if I had the definitive answer to that I would not make my closing disclosure.  The current Fibonacci retracement it is sitting on is quite a strong one that is roughly at an area that offered previous resistance.  We may see the stock hold around this ~$40 level for a while.  While some analysts continue to shamelessly pimp $60 and $70 targets I would be surprised to see the stock overcome its recent sellfest to that extent.  If it does recover, I would expect significant resistance at around $45.  To the downside, if $40 doesn’t hold then next stop looks like $33-$35 with a 52-week low of about $20 as an absolute worst-case (I would be amazed to see that price but who knows?).

This quote from a former employee on Glassdoor.com in 2011 still  rings loud: ” Company is a one trick pony, and that one trick can easily be made obsolete.”  Actually, not so much since the GoIndustry acquisition, but the integration of that isn’t done yet.

Well, I guess the pricing comments were fairly prescient:

I have followed LQDT from its IPO.  I have found it to follow Fibonacci retracements and projections very reliably, and its price has an affinity for round $5 numbers.  It is currently ranked #4 at Zacks, underperform, sell.  Marketclub has it at three red triangles, -90.  It closed at $30.19 on Friday off its low for the day.  The shape of Friday’s candle shows that maybe it will put up a struggle at the $30 mark.  I don’t think things look good though.  Money flow hasn’t hit prior lows, it’s running away from its 10day-SMA and MACD looks to be rolling over to the negative again.  I am not calling this a short but $25 looks like a distinct possibility.  Historically, LQDT’s options have been expensive, but just now the June contract in-the-money $40 and $35 or close-to-the-money $30 could reward those with a speculative bent, if the fight at $30 fails — which I think it has a good chance of doing.  I believe the real support was at $33 with next at $25.

What I said last July is still true: I do not presently hold any long or short stock or options positions in LQDT nor do I currently plan to make any.  I have not held any long or short stock or option position in LQDT since early May 2012.

I subscribe to several for-pay services.  Some I like more than others.  Ones that consistently rank high with me are Marketclub/INO,  Zacks and Bespoke Investment Group (“BIG”).  BIG is rather different to the other two.  If you like data-driven analysis, you’ll like BIG.  BIG is invariable professional.  You may see them frequently quoted in the financial press.  They recently reported the results of their first voluntary members’ survey, which is what piqued the impetus for this article.  The survey covered both individual and institutional investors.  Self-serving it may be, but I happen to think the paying customers of BIG are smarter than the average bear.  Key point for this article is that both the individual and institutional investors liked Technology as the best sector for the next six months.

As an investor with my own money, I tend to using ETFs, although I will take individual equity positions.  It depends on the term and portfolio I’m investing in.  I considered four broad-based technology ETFs to play a possible positive ride in the technology sector (click on the chart to enlarge):

The Rydex equal-weight ETF has romped away from the others, due largely, one supposes, because it has way less exposure to that laggard du jour, AAPL.  The AAPL percentages, BTW, are at 3/8/13 for RYT and 12/31/12 for the other ETFs.  The latter percentages may have changed some since 12/31 due to AAPL’s sell off and and increase in other portfolio stocks.  Be that as it may, some folk might think that with AAPL changing hands at a P/E of about 9, that as it hovers at a price somewhat above $400 it may be worth considering.  In which case, depending on your loving or loathing for all things AAPL, you may wish to consider which tech ETF best suits your purpose.  If you think AAPL will continue to be a loser then RYT is the way to go despite a healthy expense ratio of 0.5%.  Were I to want some AAPL exposure I would probably lean to VGT.  An alternative approach, trading costs be damned, might be to blend the two ETFs depending on how you love or loathe AAPL.  Your intended holding period would impact your decision, too.

The BIG members offered pretty mixed insight.  AAPL was the biggest long position in the portfolio of by far the most respondents.  On the other hand, it was also the stock that by far the most respondents were most bearish on.  Go figure. But, that probably sums up market sentiment on AAPL too.  You can check out free stuff (and there’s a lot of it) from BIG HERE.

On February 10th this year, we wrote a piece that graphically represented IBD’s market calls (“uptrend” and “correction” only, “under pressure” omitted) against the equity graph of our IBD50 Top-10 model portfolio.  Based on that review, I concluded that in that application these market timing signals might not be the best signals to enter or leave the market.

In the real world I am still favoring a system that uses trailing stops of 7% or 8% set on individual stocks for exits, but using market calls to determine if replacements will be made.

That said, last week I took a list of IBD market calls beginning with the “market resumes uptrend” call on 1/26/11 (after close) and purchased Vanguard’s total stock market ETF VTI. I held the ETF until the next “market in correction” call and sold at the open the next day. Positions were replaced at the open following the next “uptrend” call, and so on. I ran the model through to the last “market in correction” call on February 25th this year.

The period was 761 days long.  The model would have held VTI for 494 days or 65% of the time.  The longest holding period was 106 days (+13.6%), the shortest 1 day (-2.0%) with an average of 45 days.

The best profit was +13.6%, the worst loss -2.8% with the average result being a gain of 2.2%.  Given this period covered some significant down periods, I like the way downsides were limited.

There were 11 holding periods.  7 resulted in a profit, which is 64% of the time.

Compounding the results for each of the periods the total gain obtained was 25.6%.  Buy and hold for the same period would have yielded 15%.  So, the strategy beat buy and hold by 71%.  Not shabby.  FYI, for the same period, SPX, COMPEX and RUT returned 14.8%, 13.8% and 12.9% respectively.

CONCLUSION: IBD’s market timers can be used as a market timing guide, and, based on the results we obtained, can beat a buy and hold strategy.  Using different instruments will return different results.

Those of you who follow our Investors’ Business Daily IBD50 Top-10 portfolio results regularly will know that we are always long the portfolio, we don’t market time or use money management in the model or illustrative portfolio we track.  Just over two years after inception with an original investment of $50,000, the portfolio has a value of $67,604 or an increase of 38%.  Nice numbers but one has to feel that some market timing or money management might improve results.

The following chart, illustrates where IBD market calls of “correction” or “uptrend” were made.  Please note we have only shown the original calls and have ignored the “under pressure” and subsequent “uptrend” or “uptrend resumes” calls.  Please ignore the portfolio value number on the graphic.  I printed the chart without regard to that item and actually inserted the arrows during a transatlantic flight, so sorry, it is what it is.  I think the instant conclusion is that 2011 was a hard year for market timers where a lot of the calls end up putting investors in or out of the market at pretty similar levels.  We see about five major moves made, but based purely on a visual review of the calls and the graph, I would have to say that other strategies might be better.  I personally lean to a 7=8% trailing stop with replacements purchased off the IBD T-10 (e.g., highest ranked not already held)  if the market is in uptrend according to the IBD..

We obtained the timing data from the Dark Liquidity website as IBD does not provide archived data.  The DL website has lots of other useful data points.  Click the individual graphics if you wish to view them full-size.

As a cross-check we also used market calls up/down from a major subscription service for individual investors.  The calls are based on whole-market trends, so one could argue that they are not directly applicable to the “leading” or “momentum” stocks followed in the IBD 50.  Three major market moves were captured, otherwise I’d repeat my observation about 2011 being a bad year for market timers and add, based purely on a review of the graph and the calls that other than the three big good calls, that one would likely have been better off betting against the calls as issued as they translated into movements in the IBD T-10 portfolio.  This is definitely not a good choice for calling leading IBD stocks.

This is clearly going to be a work in progress so we will archive this series in a new page under our IBD portfolio head.

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.

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:

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.

Although value investments aren’t a field we cover much, we do keep our eye on opportunities.  It seems to us that this may be an area where an individual can do a little better with some of his or her investing dollars that have an intermediate or longer time horizon attached to them.  Such reviews are not trading suggestions.  Personally, I am looking at around a one-year holding period as a general guide.

What follows is not a recommendation.  It is a suggestion to you as a stock worthy of your examination and research.  It may or may not fit your own investing criteria.  On the disclosure side you should consider it likely that we will take a long position in this stock within the next forty-eight hours.  As a result of a screen we carried out yesterday, we believe that ticker JBSS is worthy of your review.  Prices shown in the tables are as of yesterday.  At time of writing, JBSS closed at $18.65.  A weekly chart of JBSS is:

Our initial screen, performed in Zacks Research, was to look for stocks with a price to book less than one, and a PE ratio of less than ten.  We then matched the list to current Zacks #1 rated stocks.  This is the table of stocks that passed that screen:

We then used VectorVest provide additional data.  Following that review we selected JBSS as the candidate of choice.  For what it is worth, “honorable mention” here would be Blackstone Group, BX, but that is largely because we like its real estate holdings as an inflationary hedge. JBSS is in the packaged foods business, principally in nuts.  This is how some valuation metrics stack up against its peers:

We find the numbers attractive for JBSS.  It also has growth numbers that exceed its peers.  Using our TDAmeritrade Apex account we ran through the research notes and found as follow (the VectorVest and Zacks recommendations are our addition):

We find the numbers and outlook encouraging for JBSS.  Were its price to reach $25, we would re-evaluate the position but a sale at that price would be a 34% profit.  Who knows if it will get there?  I would personally set a hard stop at $16.50 which would be about an 11.5% loss.   The stock is consolidating some now and may hit resistance just shy of $20 — you may get it a bit cheaper, but our thinking is that is fairly priced at $18.65 with a potential one-year holding period. Your thoughts??

]]> http://paladinmoney.com/2012/12/24/paladin-money-value-suggestion-john-b-sanfilippo-son-inc-nasdaqjbss/feed/ 1 ahumpage JBSS chart JBSS table JBSS valuation jbss recs http://paladinmoney.com/2012/12/15/ibd50-top-10-model-portfolio-updated/ http://paladinmoney.com/2012/12/15/ibd50-top-10-model-portfolio-updated/#comments Sun, 16 Dec 2012 06:06:04 +0000 Paladin Money http://paladinmoney.com/?p=2507 ]]>

Our IBD model portfolio project is now up to date HERE.

Lots of buying and selling; -6.115% of portfolio value lost since the general election, still trending down.