Dear Investors,
Either we’re 7.3% into a correction or we’re at the start of a new bear market.
As I mentioned in my new special report, Dow Theory issued a sell signal last week and all major indexes are below their 200 day moving averages and sitting near their two month lows.
Like last week, the market attempted a rally on a holiday shortened Friday but the S&P still ended down -1.2% on the week and -7.0% so far for November.
By way of comparison, Wall Street Sector Selector gained 1.67% last week and is down -3.3% for November.
What I said last week still holds true this week: “Overall market risk is very high and strength is weak.”
How We’re Doing
We gained ground this week as our two open positions aren’t closely correlated to the S&P and so went up as the S&P went down.
Year to Date we stand at +20.62% compared to +1.7% for the S&P500.
The market is at a crossroads. It is extremely oversold, and either we’ll see a bounce and a resumption of the upward momentum or we’ll continue downwards into a new bear market.
The Week Ahead
The week ahead is a busy one with many potential market moving reports.
Reports we’ll be watching are:
Existing Home Sales—Tuesday
Case-Shiller Home Price Index—Tuesday
Durable Goods Orders—Wednesday
Fed Beige Book Report on Economic Activity—Wednesday
New Home Sales—Thursday
3rd Quarter Revised GDP Report—Thursday
October Construction Spending—Friday
Sector Spotlight
Leaders:
Energy
Commodities
Agriculture
Bonds
Laggards:
Asia, led by China
Home Construction
Finance
Real Estate
I hope you had a wonderful and peaceful Thanksgiving Holiday and weekend. We had a wonderful day with by big son home from college and just the four of us together. With kids off to college or grown, your family changes and its nice to regroup into the old unit and laugh about bygone days and good times we shared together.
We celebrated with all the usual waistline busting traditions and cheered my young son who brought home straight As on his first high school report card. Mt. Bachelor is open for skiing and I’m waiting impatiently for my elbow to heal so I can make a few early season turns.
Wishing you the best for a peaceful Sunday and week ahead.
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://www.wall-street-sector-selector.com
Sunday, November 25, 2007
Saturday, November 17, 2007
Is That a Bear Knocking? Part2
Hi, Friends,
Is that a bear knocking?
I asked that rhetorical question last week, and this week, the answer remains the same. Perhaps. But overall, the market looks as weak as it has since summer’s swoon, now reaching oversold conditions and sitting on two month lows.
The midweek rally faded to a fractional gain for the week, and the leadership rotation out of Asia and tech. stocks has been nothing short of breathtaking with the NASDAQ down 7.8% and the China MSCI Index down 18.36% since Halloween..
Month to date, only 14 ETFs out of the 72 I monitor show any kind of short term strength, down from 18 last week. Overall market risk is very high and strength is weak.
How We’re Doing
This week we continued raising cash in the portfolio in response to the deteriorating conditions when we were stopped out on Monday with a 6.93% gain in IXP and 13.96% gain in EEM for the trades entered in September. Both of these stop losses demonstrate the rotation out of Asia and the weakness and volatility in those markets.
Leaving China 25 Index last week was a positive for us, as this index dropped another 5.9% from our stop loss point and is now down 19% from its peak just two weeks ago. We will certainly reenter this position sometime in the future but, for now, will stand aside.
Profunds recently introduced a short China 25 index that moves at double the index. The launch was met with great fanfare and already is trading close to a million shares a day, but this one would be a real roller coaster ride considering the underlying volatility of this index. This one’s too aggressive for my blood and I think would be very difficult to trade. But if you’re right, you’re going to be really right, and if you’re wrong, it’s going to be painful.
Overall, September trades returned 11.9% in realized gains in approximately two months, October trades a -0.74% return, and for November we are down -5.0% with two positions remaining open. The S&P 500 is down -5.9% for November.
Year to Date we stand at +18.96% compared to +2.82% for the S&P500.
As mentioned last week, we’re automatically switching from portfolio accumulation to portfolio protection. With our exit this month from China, Emerging Markets and Global Telecommunications, we are automatically raising cash levels in the portfolio to protect us from further declines in the market. If this decline continues, we will continue getting stopped out and locking in gains or minimizing losses.
Our two remaining positions are largely uncorrelated to the S@P and should help protect us from further declines in the general market. These are two of the strongest remaining sectors.
If a bear market is confirmed, we will switch to positions on November 1st that can profit from overall downward trends in the markets. Lacking that confirmation, we will consider hedging the portfolio with positions in sectors that are in confirmed bear markets.
The Week Ahead
The week ahead promises to be a quiet one as investors head towards a shortened week and the Thanksgiving Holiday.
Reports we’ll be watching are:
National Association of Homebuilders November report—Monday
October Housing Starts—Tuesday
Conference Board Gauge of Economic Growth--Wednesday
Sector Spotlight
As I mentioned earlier, the leadership in the market has completely changed in just the last two weeks. Month to date the only sectors showing gains are Bonds, Precious Metals and Bearish Dollar, and those gains are miniscule, at best.
Laggards are many of the former leaders; International, Tech., Emerging Markets, Asia and Software.
This rotation into negative columns for so many sectors shows the overall pervasive underlying weakness of the market.
Winter is settling into Bend with snow falling in the mountains and rain blowing the Ponderosa pines outside my living room window. Mt. Bachelor has been shrouded in clouds all day. I’m sure it’s snowing up there and I bought my ski pass this week, so I’m ready for opening day. It’s a nice Friday evening to settle in by the fire with my family for dinner and a family movie.
I wish each of you and your families a very happy and healthy Thanksgiving Holiday.
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://www.wall-street-sector-selector.com
Is that a bear knocking?
I asked that rhetorical question last week, and this week, the answer remains the same. Perhaps. But overall, the market looks as weak as it has since summer’s swoon, now reaching oversold conditions and sitting on two month lows.
The midweek rally faded to a fractional gain for the week, and the leadership rotation out of Asia and tech. stocks has been nothing short of breathtaking with the NASDAQ down 7.8% and the China MSCI Index down 18.36% since Halloween..
Month to date, only 14 ETFs out of the 72 I monitor show any kind of short term strength, down from 18 last week. Overall market risk is very high and strength is weak.
How We’re Doing
This week we continued raising cash in the portfolio in response to the deteriorating conditions when we were stopped out on Monday with a 6.93% gain in IXP and 13.96% gain in EEM for the trades entered in September. Both of these stop losses demonstrate the rotation out of Asia and the weakness and volatility in those markets.
Leaving China 25 Index last week was a positive for us, as this index dropped another 5.9% from our stop loss point and is now down 19% from its peak just two weeks ago. We will certainly reenter this position sometime in the future but, for now, will stand aside.
Profunds recently introduced a short China 25 index that moves at double the index. The launch was met with great fanfare and already is trading close to a million shares a day, but this one would be a real roller coaster ride considering the underlying volatility of this index. This one’s too aggressive for my blood and I think would be very difficult to trade. But if you’re right, you’re going to be really right, and if you’re wrong, it’s going to be painful.
Overall, September trades returned 11.9% in realized gains in approximately two months, October trades a -0.74% return, and for November we are down -5.0% with two positions remaining open. The S&P 500 is down -5.9% for November.
Year to Date we stand at +18.96% compared to +2.82% for the S&P500.
As mentioned last week, we’re automatically switching from portfolio accumulation to portfolio protection. With our exit this month from China, Emerging Markets and Global Telecommunications, we are automatically raising cash levels in the portfolio to protect us from further declines in the market. If this decline continues, we will continue getting stopped out and locking in gains or minimizing losses.
Our two remaining positions are largely uncorrelated to the S@P and should help protect us from further declines in the general market. These are two of the strongest remaining sectors.
If a bear market is confirmed, we will switch to positions on November 1st that can profit from overall downward trends in the markets. Lacking that confirmation, we will consider hedging the portfolio with positions in sectors that are in confirmed bear markets.
The Week Ahead
The week ahead promises to be a quiet one as investors head towards a shortened week and the Thanksgiving Holiday.
Reports we’ll be watching are:
National Association of Homebuilders November report—Monday
October Housing Starts—Tuesday
Conference Board Gauge of Economic Growth--Wednesday
Sector Spotlight
As I mentioned earlier, the leadership in the market has completely changed in just the last two weeks. Month to date the only sectors showing gains are Bonds, Precious Metals and Bearish Dollar, and those gains are miniscule, at best.
Laggards are many of the former leaders; International, Tech., Emerging Markets, Asia and Software.
This rotation into negative columns for so many sectors shows the overall pervasive underlying weakness of the market.
Winter is settling into Bend with snow falling in the mountains and rain blowing the Ponderosa pines outside my living room window. Mt. Bachelor has been shrouded in clouds all day. I’m sure it’s snowing up there and I bought my ski pass this week, so I’m ready for opening day. It’s a nice Friday evening to settle in by the fire with my family for dinner and a family movie.
I wish each of you and your families a very happy and healthy Thanksgiving Holiday.
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://www.wall-street-sector-selector.com
Saturday, November 10, 2007
Is that a Bear Knocking?
Is that a Bear Knocking?
Hi, Friends,
Perhaps, with the S@P 500 now down -6.18% for November amid the continuing shelling of the financials due to the sub prime meltdown. Consumer confidence has sunk to a 13 month low according to the University of Michigan Consumer Confidence Index and the Dow managed to shed -4.1% for the week while the NASDAQ led the parade downward with a weekly loss of -6.5%.
The general market is hanging on above long term trend lines but is now perilously close to bear market status. Only 18 ETFs out of the 72 I monitor show any kind of short term strength. Overall market risk is very high.
We have already automatically shifted our focus from portfolio accumulation to portfolio protection, and if a bear market develops, we will transition to positions and sectors that can continue to profit even as the markets decline.
How We’re Doing
This week’s market action demonstrated some key elements of sector rotation trading.
Here’s a quick synopsis:
Sectors that are hot can turn on a dime and collapse just as fast as they went up. This week we were stopped out of ishares China 25 Index, FXI, for a realized gain of 26.4% since the trade was initiated on September 4th. The reversal in this ETF was breathtaking as it went from a high of $219.56 on October 31st to $182.0 on Friday, a -17.1% loss in 7 trading days. And that’s why trading with stop loss positions are so important in sector rotation.
Diversification across the portfolio is important. Members who entered FXI in September or October walked away with nice gains, but new money added on November 1st suffered a 10% decline in FXI. However, averaged across all five positions, the portfolio is down -3.66% so far in November compared to -6.18% for the S@P 500.
We are automatically switching from portfolio accumulation to portfolio protection. With our exit from the China position, we are automatically raising cash levels in the portfolio to protect us from further declines in the market. If this decline continues, we will continue getting stopped out and locking in gains or minimizing losses.
Two of our positions are largely uncorrelated to the S@P and should help protect us from further declines in the general market. These are two of the strongest remaining sectors and show no signs of weakening yet.
If a bear market is confirmed, we will switch to positions that can profit from downward trends in the markets.
The View from 35,000 Feet
The fly in the ointment, of course, is the continuing fallout from the sub prime lending situation and resultant credit crunch. Financial stocks are widely represented on the S@P and with the likes of Merrill Lynch, Citicorp and Wachovia taking huge hits, the S@P will continue to experience downward pressure.
Furthermore, rising oil prices and a collapsing dollar will add to the general malaise. Fed Chairman Bernanke told Congress this week he expects the economy to slow ‘noticeably” well into next year and he pointed out the problems associated with continuing weakness in the housing sector and potential inflation stemming from rising oil and commodity prices.
All in all, as I wrote a couple of weeks ago, Gentle Ben and his Merry Band of Feds are between a rock and a hard place. They need to continue lowering interest rates to stave off a financial collapse, while at the same time, they need to hold interest rates steady or even raise them to stem inflationary pressures.
The short term solution will be lower interest rates.
Longer term, as the credit crisis and housing problems are worked out, the shift will be to higher interest rates and inflation fighting.
The Week Ahead
Significant reports this week include:
Tuesday: September pending home sales
Wednesday: October retail sales and Producer Price Index reports
Thursday: Consumer Price Index Report
Sector Spotlight
Leaders: Precious Metals, Energy and bearish dollar
Laggards: International, Technology
So, it’s easy to see how quickly market leadership and strength can change or “rotate” from sector to sector. We will maintain our current positions and stops and let the market tell us where it’s going rather than trying to guess what’s going to happen next. The key to success is following a disciplined, unemotional trading system no matter what we hear around us, and on December 1st, we will rebalance the portfolio to reflect what the signals are telling us then. Expect continued volatility through the remainder of this month.
Watch for a new Special Report, “Surviving Sub Prime,” that I’ll send you early next week.
I am an ex Air Force Officer from the Viet Nam era, and, though I was never in combat, appreciate Veteran’s Day as a time to honor our men in uniform and their families, particularly during these troubled times.
Last Veteran’s Day, I arrived in Portland on a flight from Washington, D.C., on a dark, drizzly night and watched a flag draped casket coming off the plane and being met on the ramp by a military honor guard. The soldier’s Mom and Dad were waiting for him on the tarmac, and as his Mother’s hands went to her mouth, I witnessed firsthand the meaning and depth of their sacrifice.
Have a great holiday weekend and please take a moment to honor that soldier and his brave companions.
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
Hi, Friends,
Perhaps, with the S@P 500 now down -6.18% for November amid the continuing shelling of the financials due to the sub prime meltdown. Consumer confidence has sunk to a 13 month low according to the University of Michigan Consumer Confidence Index and the Dow managed to shed -4.1% for the week while the NASDAQ led the parade downward with a weekly loss of -6.5%.
The general market is hanging on above long term trend lines but is now perilously close to bear market status. Only 18 ETFs out of the 72 I monitor show any kind of short term strength. Overall market risk is very high.
We have already automatically shifted our focus from portfolio accumulation to portfolio protection, and if a bear market develops, we will transition to positions and sectors that can continue to profit even as the markets decline.
How We’re Doing
This week’s market action demonstrated some key elements of sector rotation trading.
Here’s a quick synopsis:
Sectors that are hot can turn on a dime and collapse just as fast as they went up. This week we were stopped out of ishares China 25 Index, FXI, for a realized gain of 26.4% since the trade was initiated on September 4th. The reversal in this ETF was breathtaking as it went from a high of $219.56 on October 31st to $182.0 on Friday, a -17.1% loss in 7 trading days. And that’s why trading with stop loss positions are so important in sector rotation.
Diversification across the portfolio is important. Members who entered FXI in September or October walked away with nice gains, but new money added on November 1st suffered a 10% decline in FXI. However, averaged across all five positions, the portfolio is down -3.66% so far in November compared to -6.18% for the S@P 500.
We are automatically switching from portfolio accumulation to portfolio protection. With our exit from the China position, we are automatically raising cash levels in the portfolio to protect us from further declines in the market. If this decline continues, we will continue getting stopped out and locking in gains or minimizing losses.
Two of our positions are largely uncorrelated to the S@P and should help protect us from further declines in the general market. These are two of the strongest remaining sectors and show no signs of weakening yet.
If a bear market is confirmed, we will switch to positions that can profit from downward trends in the markets.
The View from 35,000 Feet
The fly in the ointment, of course, is the continuing fallout from the sub prime lending situation and resultant credit crunch. Financial stocks are widely represented on the S@P and with the likes of Merrill Lynch, Citicorp and Wachovia taking huge hits, the S@P will continue to experience downward pressure.
Furthermore, rising oil prices and a collapsing dollar will add to the general malaise. Fed Chairman Bernanke told Congress this week he expects the economy to slow ‘noticeably” well into next year and he pointed out the problems associated with continuing weakness in the housing sector and potential inflation stemming from rising oil and commodity prices.
All in all, as I wrote a couple of weeks ago, Gentle Ben and his Merry Band of Feds are between a rock and a hard place. They need to continue lowering interest rates to stave off a financial collapse, while at the same time, they need to hold interest rates steady or even raise them to stem inflationary pressures.
The short term solution will be lower interest rates.
Longer term, as the credit crisis and housing problems are worked out, the shift will be to higher interest rates and inflation fighting.
The Week Ahead
Significant reports this week include:
Tuesday: September pending home sales
Wednesday: October retail sales and Producer Price Index reports
Thursday: Consumer Price Index Report
Sector Spotlight
Leaders: Precious Metals, Energy and bearish dollar
Laggards: International, Technology
So, it’s easy to see how quickly market leadership and strength can change or “rotate” from sector to sector. We will maintain our current positions and stops and let the market tell us where it’s going rather than trying to guess what’s going to happen next. The key to success is following a disciplined, unemotional trading system no matter what we hear around us, and on December 1st, we will rebalance the portfolio to reflect what the signals are telling us then. Expect continued volatility through the remainder of this month.
Watch for a new Special Report, “Surviving Sub Prime,” that I’ll send you early next week.
I am an ex Air Force Officer from the Viet Nam era, and, though I was never in combat, appreciate Veteran’s Day as a time to honor our men in uniform and their families, particularly during these troubled times.
Last Veteran’s Day, I arrived in Portland on a flight from Washington, D.C., on a dark, drizzly night and watched a flag draped casket coming off the plane and being met on the ramp by a military honor guard. The soldier’s Mom and Dad were waiting for him on the tarmac, and as his Mother’s hands went to her mouth, I witnessed firsthand the meaning and depth of their sacrifice.
Have a great holiday weekend and please take a moment to honor that soldier and his brave companions.
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
Friday, November 2, 2007
Red Flags Green Flags Part 2
Red Flags or Green Flags? Part 2: Wall Street Sector Selector
Hi, Friends,
Is it red flags or green flags? Danger or all clear?
Hard to say with this week’s big sell off, the Fed cutting interest rates again but hinting this was it for awhile and the employment report on Friday. Cross currents and confusion seem to dominate with greed and fear tugging for control of the markets.
For us, it was a busy week with the portfolio rebalance, closing one trade and putting on two new positions for November. We closed out IEZ, U.S. Oil Services, which had been on since September for +4.09% gain in two months, but for new money added in October, IEZ gave up -2.86%. Earlier we were stopped out of Hong Kong Index, EWH, with a +8.6% gain for September trades and a -4.8% loss for trades put on in October.
These results reflect the choppy nature of the market we’re in and the weakness in October, but overall for October, even with the two losses, the system returned us gains of +5.93% compared to +0.15% for the S@P.
And for the first two days of November, we stand at -0.64% compared to -2.6% for the S@P.
The View from 35,000 Feet
The two big market movers this week were, of course, the Fed meeting and rate cut and the employment report on Friday. The Fed continues to catch up to the sub prime mess that we’ve been discussing for weeks, and almost daily, there’s another multi-billion dollar write off from a big financial. This week, Merrill Lynch was the big newsmaker with their CEO’s head rolling over their mounting sub prime losses and Citigroup’s CEO looks close behind with severely declining earnings for the quarter.
Of course, what’s making everyone really nervous is that no one knows for sure how big this is or what the losses on all of these derivatives are going to be, or when it’s going to be over.
I don’t have all the answers, either, but here are some things we do know:
--$800 Billion worth of sub prime loans will reset to higher rates between October, 2007, and December, 2008, and most of these homes were bought at market top.
--A Congressional Committee forecasts 2 million sub prime foreclosures in the next 18 months.
--Foreclosures compared to last year are up +201% in Arizona, +130% in Florida, +920% in Connecticut and +212% in Nevada with many other states in double or triple digit columns.
Beyond that, while the official Department of Labor jobs report showed a gain of 166,000 jobs, their informal telephone poll of households showed a net loss of 211,000 jobs and year over year job growth of just 0.7%.
What It All Means
What I wrote a couple of weeks ago appears to be unfolding:
“The economy is clearly slowing. The sub prime melt down is spreading past financials and since financials are widely represented on the S&P, that broad indicator will experience downward pressure. Oil and the high price of gasoline will act like a tax on the consumer and our petroleum based economy, and it’s hard to make a case for robust growth in the next few months.”
There are plenty of red flags and plenty of danger ahead with the credit crisis, oil heading for $100.bbl. and the consumer getting pinched as the value of his house continues its precipitous decline.
But there are plenty of green flags, as well, for each of these problems presents an opposite opportunity, and that’s what sector rotation is all about. Finding the opportunities that always exist, regardless of what’s happening around us.
The bottom line on all of this is that the probability of recession grows daily, stock prices look weaker in the short term and the Fed will continue lowering interest rates in the months ahead.
For November, I think we can expect a challenging month.
The Week Ahead
This week brings the Benny and the Feds show to Capitol Hill where Chairman Bernanke is scheduled to report to Congress; following Gentle Ben are the monthly retail sales report and the University of Michigan Consumer Confidence report.
Also, all eyes will be focused on Citicorp’s unfolding struggles and 50 more company earnings reports next week.
Sector Spotlight
Energy, international and precious metals remain the leaders. U.S. telecommunications, semi conductors and, of course, financials are the dogs, with real estate close at hand.
As I mentioned above, the short term looks decidedly weak with 75% of the sector ETFs I follow now flashing short term downward prices.
Wednesday was Halloween, and for the first time in many, many years, I didn’t go trick or treating with my kids. My big boy is in college down in Santa Barbara and my young son, now a freshman in high school, was buried in homework and too cool to go out. For all those years that have so swiftly passed, I’d dress like my kids for trick or treating. One year we were pirates, another we were Baby Darth Moll and Big Darth Moll, and my favorite was the old and young Phantom of the Opera, complete with musical score blasting from under my cape.
But my last Halloween is behind me now, and I have to say, it’s depressing. And it occurred to me on Wednesday night as the goblins came to my door, that we really should do everything in life as if it were for the first time or the last time. Because one day, it will be the last time and there’s no instant replay or another chance to go trick or treating next year.
Wishing you the best for a great autumn weekend and week ahead,
John
John Nyaradi
Publisher
Wall Street Sector Selector
http://www.wall-street-sector-selector.com
Hi, Friends,
Is it red flags or green flags? Danger or all clear?
Hard to say with this week’s big sell off, the Fed cutting interest rates again but hinting this was it for awhile and the employment report on Friday. Cross currents and confusion seem to dominate with greed and fear tugging for control of the markets.
For us, it was a busy week with the portfolio rebalance, closing one trade and putting on two new positions for November. We closed out IEZ, U.S. Oil Services, which had been on since September for +4.09% gain in two months, but for new money added in October, IEZ gave up -2.86%. Earlier we were stopped out of Hong Kong Index, EWH, with a +8.6% gain for September trades and a -4.8% loss for trades put on in October.
These results reflect the choppy nature of the market we’re in and the weakness in October, but overall for October, even with the two losses, the system returned us gains of +5.93% compared to +0.15% for the S@P.
And for the first two days of November, we stand at -0.64% compared to -2.6% for the S@P.
The View from 35,000 Feet
The two big market movers this week were, of course, the Fed meeting and rate cut and the employment report on Friday. The Fed continues to catch up to the sub prime mess that we’ve been discussing for weeks, and almost daily, there’s another multi-billion dollar write off from a big financial. This week, Merrill Lynch was the big newsmaker with their CEO’s head rolling over their mounting sub prime losses and Citigroup’s CEO looks close behind with severely declining earnings for the quarter.
Of course, what’s making everyone really nervous is that no one knows for sure how big this is or what the losses on all of these derivatives are going to be, or when it’s going to be over.
I don’t have all the answers, either, but here are some things we do know:
--$800 Billion worth of sub prime loans will reset to higher rates between October, 2007, and December, 2008, and most of these homes were bought at market top.
--A Congressional Committee forecasts 2 million sub prime foreclosures in the next 18 months.
--Foreclosures compared to last year are up +201% in Arizona, +130% in Florida, +920% in Connecticut and +212% in Nevada with many other states in double or triple digit columns.
Beyond that, while the official Department of Labor jobs report showed a gain of 166,000 jobs, their informal telephone poll of households showed a net loss of 211,000 jobs and year over year job growth of just 0.7%.
What It All Means
What I wrote a couple of weeks ago appears to be unfolding:
“The economy is clearly slowing. The sub prime melt down is spreading past financials and since financials are widely represented on the S&P, that broad indicator will experience downward pressure. Oil and the high price of gasoline will act like a tax on the consumer and our petroleum based economy, and it’s hard to make a case for robust growth in the next few months.”
There are plenty of red flags and plenty of danger ahead with the credit crisis, oil heading for $100.bbl. and the consumer getting pinched as the value of his house continues its precipitous decline.
But there are plenty of green flags, as well, for each of these problems presents an opposite opportunity, and that’s what sector rotation is all about. Finding the opportunities that always exist, regardless of what’s happening around us.
The bottom line on all of this is that the probability of recession grows daily, stock prices look weaker in the short term and the Fed will continue lowering interest rates in the months ahead.
For November, I think we can expect a challenging month.
The Week Ahead
This week brings the Benny and the Feds show to Capitol Hill where Chairman Bernanke is scheduled to report to Congress; following Gentle Ben are the monthly retail sales report and the University of Michigan Consumer Confidence report.
Also, all eyes will be focused on Citicorp’s unfolding struggles and 50 more company earnings reports next week.
Sector Spotlight
Energy, international and precious metals remain the leaders. U.S. telecommunications, semi conductors and, of course, financials are the dogs, with real estate close at hand.
As I mentioned above, the short term looks decidedly weak with 75% of the sector ETFs I follow now flashing short term downward prices.
Wednesday was Halloween, and for the first time in many, many years, I didn’t go trick or treating with my kids. My big boy is in college down in Santa Barbara and my young son, now a freshman in high school, was buried in homework and too cool to go out. For all those years that have so swiftly passed, I’d dress like my kids for trick or treating. One year we were pirates, another we were Baby Darth Moll and Big Darth Moll, and my favorite was the old and young Phantom of the Opera, complete with musical score blasting from under my cape.
But my last Halloween is behind me now, and I have to say, it’s depressing. And it occurred to me on Wednesday night as the goblins came to my door, that we really should do everything in life as if it were for the first time or the last time. Because one day, it will be the last time and there’s no instant replay or another chance to go trick or treating next year.
Wishing you the best for a great autumn weekend and week ahead,
John
John Nyaradi
Publisher
Wall Street Sector Selector
http://www.wall-street-sector-selector.com
Red Flags or Green Flags
Hi, Friends,
So, are the warning flags out or is it clear ahead? Red flags flying or green flags with the all clear, pedal to the metal?
Unfortunately for most investors, it's hard to say.
But as I said last week, "the market action and talking heads' speculations are nothing more than background noise. And that's the terrific advantage of having a proven, non emotional trading plan in place that we can depend on in good times and bad."
And that's even more true today with all of the swirling cross currents we face.
How we're doing
The market rallied sharply last week, shaking off the Black Monday fears. But we did get stopped out of Hong Kong in the volatility. September Hong Kong trades made 8.6% while new positions in Oct. lost -4.8%. As the tables above indicate, both September and October trades continue to perform well.
However, in spite of last week's rally, change is in the air, and our indicators are flashing short term weakness. The action in Hong Kong, today's new stop loss points and next week's rebalance will reflect this rapidly changing environment.
Subscribers need to watch for your Stop Loss Update later today and have your stops in place before market open on Monday. The closer you are able to follow the system's entry and exit points, the more likely your chances of success.
The View from 35,000 Feet
A mixed bag to be sure. Here are some of the significant developments accompanying last week's rally:
Negative earnings growth so far for the S&P. With 218 companies reporting next week, this continued trend would result in first negative growth quarter in five years.
28 year high in gold hitting $787/oz.
Record low U.S. Dollar against the Euro.
Record high oil touching $92/bbl.
Home sales down 19% from one year ago
National Association of Homebuilders reports lowest index ever.
2 million home foreclosures forecast over next two years by Joint Economic Committee Chairman Senator Charles Schumer.
So, where did the fear go from last week, and why did it so swiftly depart? The answer, of course, lies with Benny and his Merry Band of Feds and their Halloween meeting this week.
The market has already priced in that it will be treat instead of trick and is planning on a 25 basis point rate cut in its candy bag. I wrote after last month's cut that more cuts would be coming and they will be, right or wrong, for the dollar and inflation.
The Week Ahead
Next week will have more than 200 companies reporting earnings with the possibility of the first negative earnings growth in five years.
We'll also see the October employment report on Wednesday and the 3rd Quarter GDP estimate.
And of course, the biggie is the two day Fed meeting ending Wednesday.
What It All Means
Cross currents and confusion. Volatility, too. And as I wrote last week, "a recession in 2008 is so politically unpalatable that we'll see plenty of Fed intervention in hopes of making the proverbial soft landing."
Interestingly, we'll be rebalancing the portolio right after the Fed meeting, so Thursday will be an important day.Sector Spotlight
The hot sectors this week were energy, commodities and gold with Real Estate, Financials and Home Construction being the bottom feeders.
Last Wednesday, I had elbow surgery for some "boomeritis" and I learned firsthand the truth in the old saying that "it's minor surgery unless it's on you."
My right arm looks like a bandged prop from a Frankenstein movie, and typing this report one handed has been a challenge. Definitely makes one appreciate full mobility.
Have a great weekend and Happy Halloween and be sure to watch for your stop loss update today and portfolio rebalance on Wednesday.
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://www.wall-street-sector-selector.com
So, are the warning flags out or is it clear ahead? Red flags flying or green flags with the all clear, pedal to the metal?
Unfortunately for most investors, it's hard to say.
But as I said last week, "the market action and talking heads' speculations are nothing more than background noise. And that's the terrific advantage of having a proven, non emotional trading plan in place that we can depend on in good times and bad."
And that's even more true today with all of the swirling cross currents we face.
How we're doing
The market rallied sharply last week, shaking off the Black Monday fears. But we did get stopped out of Hong Kong in the volatility. September Hong Kong trades made 8.6% while new positions in Oct. lost -4.8%. As the tables above indicate, both September and October trades continue to perform well.
However, in spite of last week's rally, change is in the air, and our indicators are flashing short term weakness. The action in Hong Kong, today's new stop loss points and next week's rebalance will reflect this rapidly changing environment.
Subscribers need to watch for your Stop Loss Update later today and have your stops in place before market open on Monday. The closer you are able to follow the system's entry and exit points, the more likely your chances of success.
The View from 35,000 Feet
A mixed bag to be sure. Here are some of the significant developments accompanying last week's rally:
Negative earnings growth so far for the S&P. With 218 companies reporting next week, this continued trend would result in first negative growth quarter in five years.
28 year high in gold hitting $787/oz.
Record low U.S. Dollar against the Euro.
Record high oil touching $92/bbl.
Home sales down 19% from one year ago
National Association of Homebuilders reports lowest index ever.
2 million home foreclosures forecast over next two years by Joint Economic Committee Chairman Senator Charles Schumer.
So, where did the fear go from last week, and why did it so swiftly depart? The answer, of course, lies with Benny and his Merry Band of Feds and their Halloween meeting this week.
The market has already priced in that it will be treat instead of trick and is planning on a 25 basis point rate cut in its candy bag. I wrote after last month's cut that more cuts would be coming and they will be, right or wrong, for the dollar and inflation.
The Week Ahead
Next week will have more than 200 companies reporting earnings with the possibility of the first negative earnings growth in five years.
We'll also see the October employment report on Wednesday and the 3rd Quarter GDP estimate.
And of course, the biggie is the two day Fed meeting ending Wednesday.
What It All Means
Cross currents and confusion. Volatility, too. And as I wrote last week, "a recession in 2008 is so politically unpalatable that we'll see plenty of Fed intervention in hopes of making the proverbial soft landing."
Interestingly, we'll be rebalancing the portolio right after the Fed meeting, so Thursday will be an important day.Sector Spotlight
The hot sectors this week were energy, commodities and gold with Real Estate, Financials and Home Construction being the bottom feeders.
Last Wednesday, I had elbow surgery for some "boomeritis" and I learned firsthand the truth in the old saying that "it's minor surgery unless it's on you."
My right arm looks like a bandged prop from a Frankenstein movie, and typing this report one handed has been a challenge. Definitely makes one appreciate full mobility.
Have a great weekend and Happy Halloween and be sure to watch for your stop loss update today and portfolio rebalance on Wednesday.
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://www.wall-street-sector-selector.com
Prepping for Monday
Prepping for Monday
Hi, Friends,
Not a good week last week, made worse by the media’s incessant fear mongering about the 20th anniversary of Black Monday on October 19, 1987.
But, for us, the market action and talking heads’ speculations are nothing more than background noise. And that’s the terrific advantage of having a proven, non emotional trading plan in place that we can depend on in good times and bad.
Our indicators accurately called the beginning of this run, and now are flashing some short term weakness. The S&P looks decidedly high risk short term, and although most of our positions are not S&P components, in stressful times, all markets around the world move as one.
To respond, we’ll be tightening our stops for Monday morning. Subscribers need to watch for your Stop Loss Update later today and have your stops in place before market open on Monday. The closer you are able to follow the system’s entry and exit points, the more likely your chances of success.
In spite of the short term weakness, all up trends in our positions remain firmly in place.
The View from 35,000 Feet
This week’s sell off was prompted by the poor earnings reports from the financials and industrials. Everyone knew there were big hits coming due to the sub prime morass but the reality of billion dollar write offs was a staggering hit to the markets, sending the DOW down 360+ points on Friday and -2.64% for the day and -4% for the week. The S&P did no better, down -2.56% on the day and -3.9% for the week.
A strong whiff of fear was in the air as investors mulled over the weak earnings, the weaker dollar and oil breaking the $90/bbl. More and more the talk is of recession as the housing woes spill over into the general market. And this story isn’t over yet as most of the sub prime resets to higher interest rates is scheduled for first quarter next year.
Reflecting this reality, Fed Chairman Gentle Ben Bernanke on Monday said that the housing negative pull on the economy was getting worse and would hurt growth for the Fourth Quarter and into 2008.
As I wrote last week, Benny and his Merry Band of Feds are between a rock and a hard place, worrying about inflation while having to cut interest rates to prevent a recession in a Presidential Election year, and all indications point to the rock getting bigger and the hard place getting harder. As the bad news unfolded this week, the Fed meeting on Halloween looms bigger in the background.
The Week Ahead
Next week will have more than 160 companies reporting earnings. More than 120 have reported so far and earnings growth is in the negative column. Next week’s focus is on tech and health care as well as at lest six Dow companies reporting. Also, September Durable Goods, weekly jobless numbers and home sales reports will give investors plenty of data to chew on.
What It All Means
The economy is clearly slowing. The sub prime melt down is spreading past financials and since financials are widely represented on the S&P, that broad indicator will experience downward pressure. Oil and the high price of gasoline will act like a tax on the consumer and our petroleum based economy, and it’s hard to make a case for robust growth in the next few months.
All of this points to Benny and his Merry Band of Feds and their Halloween meeting. More bad news this week could easily lead to a rate cut and a month end rally. Will it be trick or treat? No one can make that call, but we’ll be ready for either eventuality.
My view is that a recession in 2008 is so politically unpalatable that we’ll see the Feds manipulating the markets and the economy in hopes of making the proverbial soft landing and easy money will lead to market gains leading into next year.
Sector Spotlight
This weekend we’re in Hood River, Oregon, for a swim meet with my young son and the Hood River Fall Festival. If you’ve never been here, Hood River is a quaint little town on the banks of the Columbia River with a rural valley setting known as “the fruit loop” to sightseers. The fall foliage brings a ton of “leaf peepers,” and from the valley you can see the snowy volcanic peaks of Mt. Hood to the south and Mt. Adams across the river to the north. Framed in brilliant yellows and reds, it’s truly a spectacular setting.
For ten years we’ve come here, watching the kids swim and stopping at Rasmussen’s Farm for pumpkins, caramel apples, boxes of pears and apples, and spruce cider, a local “delicacy.” It’s always a fun time, and as the leaves blow across the wet ground, the salmon return home to their spawning grounds in Hood River and goblins start showing up on front lawns, one knows that deep autumn and harvest time are here.
Wishing you the best for a great autumn weekend and week ahead,
Your Partner in Prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://www.wall-street-sector-selector.com
Hi, Friends,
Not a good week last week, made worse by the media’s incessant fear mongering about the 20th anniversary of Black Monday on October 19, 1987.
But, for us, the market action and talking heads’ speculations are nothing more than background noise. And that’s the terrific advantage of having a proven, non emotional trading plan in place that we can depend on in good times and bad.
Our indicators accurately called the beginning of this run, and now are flashing some short term weakness. The S&P looks decidedly high risk short term, and although most of our positions are not S&P components, in stressful times, all markets around the world move as one.
To respond, we’ll be tightening our stops for Monday morning. Subscribers need to watch for your Stop Loss Update later today and have your stops in place before market open on Monday. The closer you are able to follow the system’s entry and exit points, the more likely your chances of success.
In spite of the short term weakness, all up trends in our positions remain firmly in place.
The View from 35,000 Feet
This week’s sell off was prompted by the poor earnings reports from the financials and industrials. Everyone knew there were big hits coming due to the sub prime morass but the reality of billion dollar write offs was a staggering hit to the markets, sending the DOW down 360+ points on Friday and -2.64% for the day and -4% for the week. The S&P did no better, down -2.56% on the day and -3.9% for the week.
A strong whiff of fear was in the air as investors mulled over the weak earnings, the weaker dollar and oil breaking the $90/bbl. More and more the talk is of recession as the housing woes spill over into the general market. And this story isn’t over yet as most of the sub prime resets to higher interest rates is scheduled for first quarter next year.
Reflecting this reality, Fed Chairman Gentle Ben Bernanke on Monday said that the housing negative pull on the economy was getting worse and would hurt growth for the Fourth Quarter and into 2008.
As I wrote last week, Benny and his Merry Band of Feds are between a rock and a hard place, worrying about inflation while having to cut interest rates to prevent a recession in a Presidential Election year, and all indications point to the rock getting bigger and the hard place getting harder. As the bad news unfolded this week, the Fed meeting on Halloween looms bigger in the background.
The Week Ahead
Next week will have more than 160 companies reporting earnings. More than 120 have reported so far and earnings growth is in the negative column. Next week’s focus is on tech and health care as well as at lest six Dow companies reporting. Also, September Durable Goods, weekly jobless numbers and home sales reports will give investors plenty of data to chew on.
What It All Means
The economy is clearly slowing. The sub prime melt down is spreading past financials and since financials are widely represented on the S&P, that broad indicator will experience downward pressure. Oil and the high price of gasoline will act like a tax on the consumer and our petroleum based economy, and it’s hard to make a case for robust growth in the next few months.
All of this points to Benny and his Merry Band of Feds and their Halloween meeting. More bad news this week could easily lead to a rate cut and a month end rally. Will it be trick or treat? No one can make that call, but we’ll be ready for either eventuality.
My view is that a recession in 2008 is so politically unpalatable that we’ll see the Feds manipulating the markets and the economy in hopes of making the proverbial soft landing and easy money will lead to market gains leading into next year.
Sector Spotlight
This weekend we’re in Hood River, Oregon, for a swim meet with my young son and the Hood River Fall Festival. If you’ve never been here, Hood River is a quaint little town on the banks of the Columbia River with a rural valley setting known as “the fruit loop” to sightseers. The fall foliage brings a ton of “leaf peepers,” and from the valley you can see the snowy volcanic peaks of Mt. Hood to the south and Mt. Adams across the river to the north. Framed in brilliant yellows and reds, it’s truly a spectacular setting.
For ten years we’ve come here, watching the kids swim and stopping at Rasmussen’s Farm for pumpkins, caramel apples, boxes of pears and apples, and spruce cider, a local “delicacy.” It’s always a fun time, and as the leaves blow across the wet ground, the salmon return home to their spawning grounds in Hood River and goblins start showing up on front lawns, one knows that deep autumn and harvest time are here.
Wishing you the best for a great autumn weekend and week ahead,
Your Partner in Prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://www.wall-street-sector-selector.com
Thursday, October 25, 2007
Up Nineteen Percent in Six Weeks
October 14, 2007
Hi, Friends,
We are in the midst of a powerful uptrend across all markets and most sectors, but as always, caution is necessary.
Since initiating our positions on September 4th, we're up 19% in unrealized gains in six weeks, and new positions placed on October 1st are up 5.6%.
Almost every sector is showing gains and the broader markets are all in up trends as the Dow and S&P500 both broke into record territory this week.
However, I'm never too excited about new records as they can be followed by sharp sell offs like the 10% drawdown this summer that came right after passing Dow 14,000 for the first time.
But for now, all of our positions remain in strong short and medium term up trends and we will be following them upwards with trailing stops to lock in these gains because it's always critical to not get complacent when the market is going our way.
Watch your inboxes this week for a new Special Report I've just written.
I've written 5 new Special Reports which are now included as Free Gifts with your guaranteed subscription.
Tthey're packed with good information and insight and you can learn more about them at
http://www.wall-street-sector-selector.com/
The View from 35,000 Feet
This week's move upward was driven by stronger than forecast retail sales and no nasty surprises in the beginning of earnings season. The tech. market went through a nasty gyration downwards on Thursday only to rally again on Friday, and oil hit a record close on Friday of $83.69/bbl. Also, there was an unexpected rise of 1.1% in the PPI, driven mostly by food and energy.
The Week Ahead
Several important reports are coming out this week which will be market movers along with earnings reports that will be coming all week:
Tuesday:
Wells Fargo reports earnings, the first of the big banks and a look at how the financials are faring after the credit crisis.
Wednesday:
JP Morgan Chase reports earnings
Sept. Housing Starts
Fed. Beige Book Report on economic activity
September Housing Starts
Thursday:
Bank of America reports earnings
Leading Economic Indicators
What It All Means
We continue to have a mixed picture as far as news is concerned and are in a very interesting tug of war between the forces of inflation and a slowdown in the economy.
On the one hand, the retail sales report, while considered good, was essentially flat when you remove gasoline and auto sales, and on the other hand, we have a rising Producer Price Index and energy prices that rose 4.1% last month alone.
Of course, Benny and the Feds are watching all of this closely and will use these inputs to decide their course at their Halloween meeting.
Fed watchers continue to play their "what will the Fed do with rates" game, and the picture is decidedly cloudy today with recent news pointing to rates staying steady at the end of October.
However, I expect that this week's reports will help to substantially clear up the picture and give us a more focused view of what the Feds might do.
But, as always, it's important to remember that Wall Street Sector Selector doesn't trade on news, which tends to be a poor predictor of market action, but rather based on our indicators which give us a view ahead for the next 4-8 weeks.
Sector Spotlight
Almost all sectors are in up trends for the month with International and Energy still leading the way. Homebuilders and Real Estate are in the positive column, and as I mentioned last week, I'm watching these two closely. While it's much too early to take a position in these, it's interesting to watch them come out of the negative column after so many months, especially with all of the negative news surrounding these sectors.
Autumn in Bend has been particularly beautiful this year with the changing leaves exploding across our town. In the mountains, golden aspen are sprinkled throughout the conifer sea, and this Saturday morning, Mount Bachelor glistens snowcapped in the sunshine outside our living room window.
Today my young son and I are heading for Twin Lake for a last night out in our R.V. and then I'll winterize and store it for winter this week. That's always the definitive close of summer around our house and something of a melancholy time. Summer is over and we're heading into the darker months, but looking at the snow capped mountain, it's exciting to think of ski season just ahead.
If you compare a human life span of 84 years to the calendar, October would be the start of a person's 64th year. It's a beautiful month, and for many people I know, a beautiful time of life.
My goal with Wall Street Sector Selector is to make all our months and years truly golden, and I greatly appreciate your confidence and trust in that important endeavor.
Have a great weekend.
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://rs6.net/tn.jsp?t=95n8pfcab.0.0.eou954bab.0&ts=S0289&p=http%3A%2F%2Fwww.wall-street-sector-selector.com%2F&id=preview
Hi, Friends,
We are in the midst of a powerful uptrend across all markets and most sectors, but as always, caution is necessary.
Since initiating our positions on September 4th, we're up 19% in unrealized gains in six weeks, and new positions placed on October 1st are up 5.6%.
Almost every sector is showing gains and the broader markets are all in up trends as the Dow and S&P500 both broke into record territory this week.
However, I'm never too excited about new records as they can be followed by sharp sell offs like the 10% drawdown this summer that came right after passing Dow 14,000 for the first time.
But for now, all of our positions remain in strong short and medium term up trends and we will be following them upwards with trailing stops to lock in these gains because it's always critical to not get complacent when the market is going our way.
Watch your inboxes this week for a new Special Report I've just written.
I've written 5 new Special Reports which are now included as Free Gifts with your guaranteed subscription.
Tthey're packed with good information and insight and you can learn more about them at
http://www.wall-street-sector-selector.com/
The View from 35,000 Feet
This week's move upward was driven by stronger than forecast retail sales and no nasty surprises in the beginning of earnings season. The tech. market went through a nasty gyration downwards on Thursday only to rally again on Friday, and oil hit a record close on Friday of $83.69/bbl. Also, there was an unexpected rise of 1.1% in the PPI, driven mostly by food and energy.
The Week Ahead
Several important reports are coming out this week which will be market movers along with earnings reports that will be coming all week:
Tuesday:
Wells Fargo reports earnings, the first of the big banks and a look at how the financials are faring after the credit crisis.
Wednesday:
JP Morgan Chase reports earnings
Sept. Housing Starts
Fed. Beige Book Report on economic activity
September Housing Starts
Thursday:
Bank of America reports earnings
Leading Economic Indicators
What It All Means
We continue to have a mixed picture as far as news is concerned and are in a very interesting tug of war between the forces of inflation and a slowdown in the economy.
On the one hand, the retail sales report, while considered good, was essentially flat when you remove gasoline and auto sales, and on the other hand, we have a rising Producer Price Index and energy prices that rose 4.1% last month alone.
Of course, Benny and the Feds are watching all of this closely and will use these inputs to decide their course at their Halloween meeting.
Fed watchers continue to play their "what will the Fed do with rates" game, and the picture is decidedly cloudy today with recent news pointing to rates staying steady at the end of October.
However, I expect that this week's reports will help to substantially clear up the picture and give us a more focused view of what the Feds might do.
But, as always, it's important to remember that Wall Street Sector Selector doesn't trade on news, which tends to be a poor predictor of market action, but rather based on our indicators which give us a view ahead for the next 4-8 weeks.
Sector Spotlight
Almost all sectors are in up trends for the month with International and Energy still leading the way. Homebuilders and Real Estate are in the positive column, and as I mentioned last week, I'm watching these two closely. While it's much too early to take a position in these, it's interesting to watch them come out of the negative column after so many months, especially with all of the negative news surrounding these sectors.
Autumn in Bend has been particularly beautiful this year with the changing leaves exploding across our town. In the mountains, golden aspen are sprinkled throughout the conifer sea, and this Saturday morning, Mount Bachelor glistens snowcapped in the sunshine outside our living room window.
Today my young son and I are heading for Twin Lake for a last night out in our R.V. and then I'll winterize and store it for winter this week. That's always the definitive close of summer around our house and something of a melancholy time. Summer is over and we're heading into the darker months, but looking at the snow capped mountain, it's exciting to think of ski season just ahead.
If you compare a human life span of 84 years to the calendar, October would be the start of a person's 64th year. It's a beautiful month, and for many people I know, a beautiful time of life.
My goal with Wall Street Sector Selector is to make all our months and years truly golden, and I greatly appreciate your confidence and trust in that important endeavor.
Have a great weekend.
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://rs6.net/tn.jsp?t=95n8pfcab.0.0.eou954bab.0&ts=S0289&p=http%3A%2F%2Fwww.wall-street-sector-selector.com%2F&id=preview
Prepping for Monday
October 20, 2007
Hi, Friends,
Not a good week last week, made worse by the media's incessant fear mongering about the 20th anniversary of Black Monday on October 19, 1987.
But, for us, the market action and talking heads' speculations are nothing more than background noise. And that's the terrific advantage of having a proven, non emotional trading plan in place that we can depend on in good times and bad.
Since September 4th, we've been on a heady roll with our portfolio up as high as 19%, to drop back this week to 14.7% compared to 1.8% for the S&P 500.
Year to Date we stand at +20.61% realized and unrealized gains compared to +5.82 for the S&P.
Our indicators accurately called the beginning of this run, and now are flashing some short term weakness. The S&P looks decidedly high risk short term, and although most of our positions are not S&P components, in stressful times, all markets around the world move as one.
To respond, we'll be tightening our stops for Monday morning. Subscribers need to watch for your Stop Loss Update later today and have your stops in place before market open on Monday. The closer you are able to follow the system's entry and exit points, the more likely your chances of success.
In spite of the short term weakness, all up trends in our positions remain firmly in place.
The View from 35,000 Feet
This week's sell off was prompted by the poor earnings reports from the financials and industrials. Everyone knew there were big hits coming due to the sub prime morass but the reality of billion dollar write offs was a staggering hit to the markets, sending the DOW down 360+ points on Friday and -2.64% for the day and -4% for the week. The S&P did no better, down -2.56% on the day and -3.9% for the week.
A strong whiff of fear was in the air as investors mulled over the weak earnings, the weaker dollar and oil breaking the $90/bbl. mark.
More and more the talk is of recession as the housing woes spill over into the general market. And this story isn't over yet as the majority of the sub prime resets to higher interest rates are scheduled for first quarter next year.
Reflecting this reality, Fed Chairman "Gentle Ben" Bernanke on Monday said that the negative pull of housing on the economy was getting worse and would hurt growth for the Fourth Quarter and into 2008.
As I wrote last week, Benny and his Merry Band of Feds are between a rock and a hard place, worrying about inflation while having to cut interest rates to prevent a recession in a Presidential Election year. All indications now point to the rock getting bigger and the hard place getting harder. As the bad news unfolded this week, the Fed meeting on Halloween looms ever larger in the background.
The Week Ahead
Next week will have more than 160 companies reporting earnings. More than 120 have reported so far and earnings growth is in the negative column.
We'll also see some important reports with September Durable Goods, weekly jobless numbers and home sales reports that will give investors plenty of data to chew on.
What It All Means
Clearly, the economy is slowing. The sub prime melt down is spreading past financials, and since financials are widely represented on the S&P, that broad indicator will experience downward pressure. Oil and the high price of gasoline will act like a tax on the consumer and so it's hard to make a case for robust growth over the next few months.
All of this points to Benny and his Merry Band of Feds and their Halloween meeting. More bad news this week could easily lead to a rate cut and a month end rally. Will it be trick or treat? No one can make that call, but we'll be ready for either eventuality.
My view is that a recession in 2008 is so politically unpalatable that we'll see plenty of Fed intervention in hopes of making the proverbial soft landing.
There has not been a losing pre-Presidential year since 1939, and I think it's likely that this year will hold true to trend.Sector Spotlight
The hot sectors this week were energy, commodities and gold, but most sectors ended up in the negative column with Real Estate, Financials and Home Construction being the bottom feeders. The rally in Real Estate and Home Construction proved to be short lived as "Gentle Ben" gave his outlook for more problems ahead and sent those sectors into the basement for the week.
This weekend we're in Hood River, Oregon, for a swim meet with my young son and the Hood River Fall Festival. If you've never been here, Hood River is a quaint little town on the banks of the Columbia River with a rural valley setting affectionately known as "the fruit loop" to sightseers.
The fall foliage brings a ton of "leaf peepers," and from the valley you can see the snowy volcanic peaks of Mt. Hood to the south and Mt. Adams across the river to the north. Framed in brilliant yellows and reds, it's truly a spectacular setting.
For ten years we've come here, watching the kids swim and stopping at Rasmussen's Farm for pumpkins, caramel apples, boxes of pears and spruce beer, a local "delicacy."
It's always a fun time, and as the leaves blow across the wet ground, the salmon return home to their spawning grounds in Hood River and goblins start showing up on front lawns, one knows that deep autumn and harvest time are here.
Wishing you the best for a great autumn Sunday and week ahead,
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://rs6.net/tn.jsp?t=6d89yfcab.0.0.eou954bab.0&ts=S0289&p=http%3A%2F%2Fwww.wall-street-sector-selector.com%2F&id=preview
Hi, Friends,
Not a good week last week, made worse by the media's incessant fear mongering about the 20th anniversary of Black Monday on October 19, 1987.
But, for us, the market action and talking heads' speculations are nothing more than background noise. And that's the terrific advantage of having a proven, non emotional trading plan in place that we can depend on in good times and bad.
Since September 4th, we've been on a heady roll with our portfolio up as high as 19%, to drop back this week to 14.7% compared to 1.8% for the S&P 500.
Year to Date we stand at +20.61% realized and unrealized gains compared to +5.82 for the S&P.
Our indicators accurately called the beginning of this run, and now are flashing some short term weakness. The S&P looks decidedly high risk short term, and although most of our positions are not S&P components, in stressful times, all markets around the world move as one.
To respond, we'll be tightening our stops for Monday morning. Subscribers need to watch for your Stop Loss Update later today and have your stops in place before market open on Monday. The closer you are able to follow the system's entry and exit points, the more likely your chances of success.
In spite of the short term weakness, all up trends in our positions remain firmly in place.
The View from 35,000 Feet
This week's sell off was prompted by the poor earnings reports from the financials and industrials. Everyone knew there were big hits coming due to the sub prime morass but the reality of billion dollar write offs was a staggering hit to the markets, sending the DOW down 360+ points on Friday and -2.64% for the day and -4% for the week. The S&P did no better, down -2.56% on the day and -3.9% for the week.
A strong whiff of fear was in the air as investors mulled over the weak earnings, the weaker dollar and oil breaking the $90/bbl. mark.
More and more the talk is of recession as the housing woes spill over into the general market. And this story isn't over yet as the majority of the sub prime resets to higher interest rates are scheduled for first quarter next year.
Reflecting this reality, Fed Chairman "Gentle Ben" Bernanke on Monday said that the negative pull of housing on the economy was getting worse and would hurt growth for the Fourth Quarter and into 2008.
As I wrote last week, Benny and his Merry Band of Feds are between a rock and a hard place, worrying about inflation while having to cut interest rates to prevent a recession in a Presidential Election year. All indications now point to the rock getting bigger and the hard place getting harder. As the bad news unfolded this week, the Fed meeting on Halloween looms ever larger in the background.
The Week Ahead
Next week will have more than 160 companies reporting earnings. More than 120 have reported so far and earnings growth is in the negative column.
We'll also see some important reports with September Durable Goods, weekly jobless numbers and home sales reports that will give investors plenty of data to chew on.
What It All Means
Clearly, the economy is slowing. The sub prime melt down is spreading past financials, and since financials are widely represented on the S&P, that broad indicator will experience downward pressure. Oil and the high price of gasoline will act like a tax on the consumer and so it's hard to make a case for robust growth over the next few months.
All of this points to Benny and his Merry Band of Feds and their Halloween meeting. More bad news this week could easily lead to a rate cut and a month end rally. Will it be trick or treat? No one can make that call, but we'll be ready for either eventuality.
My view is that a recession in 2008 is so politically unpalatable that we'll see plenty of Fed intervention in hopes of making the proverbial soft landing.
There has not been a losing pre-Presidential year since 1939, and I think it's likely that this year will hold true to trend.Sector Spotlight
The hot sectors this week were energy, commodities and gold, but most sectors ended up in the negative column with Real Estate, Financials and Home Construction being the bottom feeders. The rally in Real Estate and Home Construction proved to be short lived as "Gentle Ben" gave his outlook for more problems ahead and sent those sectors into the basement for the week.
This weekend we're in Hood River, Oregon, for a swim meet with my young son and the Hood River Fall Festival. If you've never been here, Hood River is a quaint little town on the banks of the Columbia River with a rural valley setting affectionately known as "the fruit loop" to sightseers.
The fall foliage brings a ton of "leaf peepers," and from the valley you can see the snowy volcanic peaks of Mt. Hood to the south and Mt. Adams across the river to the north. Framed in brilliant yellows and reds, it's truly a spectacular setting.
For ten years we've come here, watching the kids swim and stopping at Rasmussen's Farm for pumpkins, caramel apples, boxes of pears and spruce beer, a local "delicacy."
It's always a fun time, and as the leaves blow across the wet ground, the salmon return home to their spawning grounds in Hood River and goblins start showing up on front lawns, one knows that deep autumn and harvest time are here.
Wishing you the best for a great autumn Sunday and week ahead,
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://rs6.net/tn.jsp?t=6d89yfcab.0.0.eou954bab.0&ts=S0289&p=http%3A%2F%2Fwww.wall-street-sector-selector.com%2F&id=preview
Saturday, September 29, 2007
How We Made Double Digit Gains in September
Hi, Friends,
September is in the books and Wall Street Sector Selector returned 11.7% unrealized gains for the month compared to 3.6% for the S@P 500. On a Year to Date Basis, we’re up 17.26% compared to the S@P at 7.72%.
Of course, our monthly gains are all unrealized as we follow the maxim, “let your winners run,” but our trailing stop loss positions will lock in profits no matter which way the markets move in the future. And, if you think about it, the S@P gains are unrealized, as well, since, as the old saying goes, “the markets will fluctuate.”
September’s market action was an excellent demonstration of the power of sector rotation and our analytical methodology. It was an excellent month for almost all equities as the markets responded to the 50 basis point gift from “Benevolent Ben” and his merry band of Feds, but as always, some stocks did better than others.
Using a composite of relative strength, momentum, trend, price patterns and sector analysis, we were able to identify five sectors that outperformed “the market” by 3-16%. And this is how we were able to make double digit returns in September.
Now, of course, we won’t always see double digit months or be this successful, but the scoring system we use to analyze over 50 Exchange Traded Funds is designed to consistently lead us to outperforming sectors of the market. And, that’s why we take risk, to outperform. It makes very little sense to me to take on market risk and just equal the averages as so many index buyers do every day.
The View from 35,000 Feet
It was an interesting week as the markets continued digesting the Fed’s rate cut and came in with gains for the month and quarter in spite of a continuing avalanche of bad economic news.
The Dollar continued hitting record lows against the Euro, oil was up 11.4% in September, Gold hit a 27 year high at $752/oz., new home sales hit a 7 year low, down 8.3% in August, the lowest since June, 2000. Home sales are now down 21% for the past 12 months, and currently there is a 10 month supply of unsold homes on the market which could quickly go to 12 month with more foreclosures and sub prime mortgage resets coming down the pike in First Quarter, 2008.
As if all that wasn’t enough, the Conference Board reported consumer confidence at its lowest level in nearly two years, which points to lower spending ahead, and the Freddie Mac now forecasts a 40-45% chance of recession while “Annoying Alan Greenspan” chimed in on BBC with comments indicating that probability of a U.S. recession has increased due to the housing slump and its impact on consumer confidence and spending; he now sees chances of a recession at “still less than 50-50.”
The Week Ahead
This will be a big week for reports with September manufacturing index due out Monday, vehicle sales on Monday, pending home sales on Tuesday and the Big Kahuna, the September jobs report due out on Friday. All eyes will be on the jobs report Friday because that will give some indication of the Fed’s next move at their next meeting on Halloween; will it be trick, or will it be treat?
What It All Means
Clearly the economy is slowing and the consumer is in increasing distress and caution flags are out. A recession brings a bear market, with typical drops of 40% in the equity markets, and our view is that the Fed will continue lowering interest rates to avoid the “R” word, particularly in the Presidential Election year.
Our radar looks out 6-8 weeks, and for that time period, we see excellent opportunities to be invested in the strongest sectors and will continue to maintain our long positions with the appropriate trailing stops. Beyond that, we’ll be watching for the “R” word and the necessity to trim our positions and revert to a more defensive or even “short” posture.
Sector Spotlight
Hot sectors for September were international, particularly Asia and emerging markets, precious metals, particularly silver, and energy. Laggards were the U.S. Dollar, home construction and Transportation.
Most interestingly, ishares Real Estate Index was up 3.2% for the month compared to the S@P 500 at 3.6%. I mentioned this last week as an interesting point with all the bad news surrounding the real estate sector. Oftentimes, early moves like this are early signs of resurgence in a particular sector. This index is obviously responding to the trend towards lower interest rates, and if home construction shows a turn, a bottom to all of this glum news in housing could be on the horizon.
Last week, I went fly fishing twice to my favorite spot in the world at the headwaters of the Deschutes River. On Thursday, it was a beautiful 75 degree day, and I can’t describe how beautiful this spot is; a pristine trout stream lined with ponderosa pines, emerging from Little Lava Lake which is like a mirror for Mt. Bachelor towering behind it. And on Friday, it was snowing, but equally majestic.
The trout gods were good to me as I caught and released the glistening fish, but I also realized how much we can learn about investing from fly fishing. One has to have the right fly (investment) at the right time, skillfully cast (know when to buy,) be patient (don’t chase winners,) be disciplined (never give up) and don’t rush the fish to the net. (sell early, or late.) I had a good two days on the river; we had a good September. I’m looking forward to working with you in the days and months ahead.
Your Partner in Prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://www.wallstreetsectorselector.com
September is in the books and Wall Street Sector Selector returned 11.7% unrealized gains for the month compared to 3.6% for the S@P 500. On a Year to Date Basis, we’re up 17.26% compared to the S@P at 7.72%.
Of course, our monthly gains are all unrealized as we follow the maxim, “let your winners run,” but our trailing stop loss positions will lock in profits no matter which way the markets move in the future. And, if you think about it, the S@P gains are unrealized, as well, since, as the old saying goes, “the markets will fluctuate.”
September’s market action was an excellent demonstration of the power of sector rotation and our analytical methodology. It was an excellent month for almost all equities as the markets responded to the 50 basis point gift from “Benevolent Ben” and his merry band of Feds, but as always, some stocks did better than others.
Using a composite of relative strength, momentum, trend, price patterns and sector analysis, we were able to identify five sectors that outperformed “the market” by 3-16%. And this is how we were able to make double digit returns in September.
Now, of course, we won’t always see double digit months or be this successful, but the scoring system we use to analyze over 50 Exchange Traded Funds is designed to consistently lead us to outperforming sectors of the market. And, that’s why we take risk, to outperform. It makes very little sense to me to take on market risk and just equal the averages as so many index buyers do every day.
The View from 35,000 Feet
It was an interesting week as the markets continued digesting the Fed’s rate cut and came in with gains for the month and quarter in spite of a continuing avalanche of bad economic news.
The Dollar continued hitting record lows against the Euro, oil was up 11.4% in September, Gold hit a 27 year high at $752/oz., new home sales hit a 7 year low, down 8.3% in August, the lowest since June, 2000. Home sales are now down 21% for the past 12 months, and currently there is a 10 month supply of unsold homes on the market which could quickly go to 12 month with more foreclosures and sub prime mortgage resets coming down the pike in First Quarter, 2008.
As if all that wasn’t enough, the Conference Board reported consumer confidence at its lowest level in nearly two years, which points to lower spending ahead, and the Freddie Mac now forecasts a 40-45% chance of recession while “Annoying Alan Greenspan” chimed in on BBC with comments indicating that probability of a U.S. recession has increased due to the housing slump and its impact on consumer confidence and spending; he now sees chances of a recession at “still less than 50-50.”
The Week Ahead
This will be a big week for reports with September manufacturing index due out Monday, vehicle sales on Monday, pending home sales on Tuesday and the Big Kahuna, the September jobs report due out on Friday. All eyes will be on the jobs report Friday because that will give some indication of the Fed’s next move at their next meeting on Halloween; will it be trick, or will it be treat?
What It All Means
Clearly the economy is slowing and the consumer is in increasing distress and caution flags are out. A recession brings a bear market, with typical drops of 40% in the equity markets, and our view is that the Fed will continue lowering interest rates to avoid the “R” word, particularly in the Presidential Election year.
Our radar looks out 6-8 weeks, and for that time period, we see excellent opportunities to be invested in the strongest sectors and will continue to maintain our long positions with the appropriate trailing stops. Beyond that, we’ll be watching for the “R” word and the necessity to trim our positions and revert to a more defensive or even “short” posture.
Sector Spotlight
Hot sectors for September were international, particularly Asia and emerging markets, precious metals, particularly silver, and energy. Laggards were the U.S. Dollar, home construction and Transportation.
Most interestingly, ishares Real Estate Index was up 3.2% for the month compared to the S@P 500 at 3.6%. I mentioned this last week as an interesting point with all the bad news surrounding the real estate sector. Oftentimes, early moves like this are early signs of resurgence in a particular sector. This index is obviously responding to the trend towards lower interest rates, and if home construction shows a turn, a bottom to all of this glum news in housing could be on the horizon.
Last week, I went fly fishing twice to my favorite spot in the world at the headwaters of the Deschutes River. On Thursday, it was a beautiful 75 degree day, and I can’t describe how beautiful this spot is; a pristine trout stream lined with ponderosa pines, emerging from Little Lava Lake which is like a mirror for Mt. Bachelor towering behind it. And on Friday, it was snowing, but equally majestic.
The trout gods were good to me as I caught and released the glistening fish, but I also realized how much we can learn about investing from fly fishing. One has to have the right fly (investment) at the right time, skillfully cast (know when to buy,) be patient (don’t chase winners,) be disciplined (never give up) and don’t rush the fish to the net. (sell early, or late.) I had a good two days on the river; we had a good September. I’m looking forward to working with you in the days and months ahead.
Your Partner in Prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://www.wallstreetsectorselector.com
Sunday, September 16, 2007
Will Tuesday be D-Day?
Will Tuesday be D-Day?
Hi, Friends,
All eyes are on “Gentle Ben” and his cohorts at the Federal Reserve as they gather on Tuesday, September 18th to contemplate the future of U.S. interest rates. The market has factored in at least a 25 basis point cut and many players are hoping for a 50 basis point cut. The most likely outcome is a 25 point basis cut with an accompanying announcement pointing to further easing in the months ahead.
If the Fed leaves interest rates unchanged, there will be blood in the streets; a 25 basis point cut will be market neutral to slightly negative for the week and a 50 basis point cut would be a nice surprise. Any cut will be the first rate reduction since 2003.
Our view is that this will be the first of several interest rate cuts extending into next year.
The View from 35,000 Feet
It appears that the current situation leaves the Fed no choice but to cut interest rates even though this could have long term negative effects for the dollar and their inflation fighting efforts. There are simply too many pockets of weakness for them to ignore.
Consider this slew of recent reports:
August non-farm jobs down 4000, the first decline since 2003
August retail sales up .3% but down -.4% excluding autos, the biggest decline in a year
Oil closing Friday near record highs at $79.10/bbl
Home sales down 23% from their peak 2 years ago
And declining home sales is just the tip of that iceberg.
Goldman Sachs predicts that nationwide home prices will decline 7% this year and 7% more next year, and these declines would then be the largest since the Great Depression.
Furthermore, price declines in Florida, California and Arizona are forecast to go drop as much as 25% off their peaks, and most of the sub prime interest rate resets will come in the first and second quarter of next year, adding more downward pressure due to higher supplies of home for sale and more foreclosures.
And what this means for the general economy is that consumers will be spending less.
Fed. Economist James Kennedy estimates that consumers have spent $2.2 Trillion from their home equity since 2001, and with declining prices, this “wealth effect” will now work in reverse as people feel less wealthy and so cut spending. This phenomenon is called Mortgage Equity Extraction and is now already 50% of what it was in 1st Quarter of 2005. And this is leading to rapid revisions downward in economic growth forecasts.
So, when you add up falling home prices, rising energy prices, a flat to declining job market and the political pressures of a Presidential Election year, a series of rate cuts seems almost inevitable because, let’s face it, no politician in this country wants to face re-election with the dreaded “R” word (recession) being discussed during the campaign season.
The Week Ahead
Aside from D-Day on Tuesday, or should we call it B-Day? (Ben Day,) next week is also September Triple Witching when stock options, index options and index futures all expire on Friday. Triple witching typically leads to higher volatility, and in recent years, September Triple Witching is approximately market neutral with 8 years being positive and seven years being negative.
Sector Spotlight
Hot sectors continue to be precious metals, commodities and oil/energy (perhaps forecasting higher inflation ahead?) and international, particularly in emerging markets and the Pacific Rim.
Cold sectors are Home Construction, semi-conductors and Japan as their Prime Minister resigned and then was hospitalized for stress last week.
In an interesting anecdote to the booming Pacific Rim, a close friend of mine was in Beijing earlier this month and told me that while he was getting his $2 haircut, one of the girls working in the shop spent the whole time trading stocks on her desktop computer. Always the sign of an overheated market.
Wishing you the best for a peaceful weekend and week ahead,
John Nyaradi
Publisher
Wall Street Sector Selector
Hi, Friends,
All eyes are on “Gentle Ben” and his cohorts at the Federal Reserve as they gather on Tuesday, September 18th to contemplate the future of U.S. interest rates. The market has factored in at least a 25 basis point cut and many players are hoping for a 50 basis point cut. The most likely outcome is a 25 point basis cut with an accompanying announcement pointing to further easing in the months ahead.
If the Fed leaves interest rates unchanged, there will be blood in the streets; a 25 basis point cut will be market neutral to slightly negative for the week and a 50 basis point cut would be a nice surprise. Any cut will be the first rate reduction since 2003.
Our view is that this will be the first of several interest rate cuts extending into next year.
The View from 35,000 Feet
It appears that the current situation leaves the Fed no choice but to cut interest rates even though this could have long term negative effects for the dollar and their inflation fighting efforts. There are simply too many pockets of weakness for them to ignore.
Consider this slew of recent reports:
August non-farm jobs down 4000, the first decline since 2003
August retail sales up .3% but down -.4% excluding autos, the biggest decline in a year
Oil closing Friday near record highs at $79.10/bbl
Home sales down 23% from their peak 2 years ago
And declining home sales is just the tip of that iceberg.
Goldman Sachs predicts that nationwide home prices will decline 7% this year and 7% more next year, and these declines would then be the largest since the Great Depression.
Furthermore, price declines in Florida, California and Arizona are forecast to go drop as much as 25% off their peaks, and most of the sub prime interest rate resets will come in the first and second quarter of next year, adding more downward pressure due to higher supplies of home for sale and more foreclosures.
And what this means for the general economy is that consumers will be spending less.
Fed. Economist James Kennedy estimates that consumers have spent $2.2 Trillion from their home equity since 2001, and with declining prices, this “wealth effect” will now work in reverse as people feel less wealthy and so cut spending. This phenomenon is called Mortgage Equity Extraction and is now already 50% of what it was in 1st Quarter of 2005. And this is leading to rapid revisions downward in economic growth forecasts.
So, when you add up falling home prices, rising energy prices, a flat to declining job market and the political pressures of a Presidential Election year, a series of rate cuts seems almost inevitable because, let’s face it, no politician in this country wants to face re-election with the dreaded “R” word (recession) being discussed during the campaign season.
The Week Ahead
Aside from D-Day on Tuesday, or should we call it B-Day? (Ben Day,) next week is also September Triple Witching when stock options, index options and index futures all expire on Friday. Triple witching typically leads to higher volatility, and in recent years, September Triple Witching is approximately market neutral with 8 years being positive and seven years being negative.
Sector Spotlight
Hot sectors continue to be precious metals, commodities and oil/energy (perhaps forecasting higher inflation ahead?) and international, particularly in emerging markets and the Pacific Rim.
Cold sectors are Home Construction, semi-conductors and Japan as their Prime Minister resigned and then was hospitalized for stress last week.
In an interesting anecdote to the booming Pacific Rim, a close friend of mine was in Beijing earlier this month and told me that while he was getting his $2 haircut, one of the girls working in the shop spent the whole time trading stocks on her desktop computer. Always the sign of an overheated market.
Wishing you the best for a peaceful weekend and week ahead,
John Nyaradi
Publisher
Wall Street Sector Selector
Sunday, September 9, 2007
Will September be Good or Bad?
Will September be Good or Bad?
Hi, Friends,
Much has been written this week about how September is the worst month of the year for stock market traders and that historically this month posts the biggest % losses on the S&P, Dow and NASDAQ. And, in fact, the S@P has been down 56% of the time in September since 1975.
But, for us as sector traders, we have to look beneath “the market” since the whole idea of sector trading is to find the best performing sectors, sectors that are outperforming the market, focus on those, and so enhance our opportunities to outperform the averages.
Looking at past Septembers back to 1999, we find that the best performing sectors have outperformed the market by significant percentages. Here’s a comparison between the S&P and the best performing sectors in September dating back to 1999.
Year S@P 500 Best Performing Sector
1999 -2.85% Precious Metals +29.2%
2000 -5.34% Utilities +10.4%
2001 -8.17% Precious Metals +3.4%
2002 -11% Gaming +7.3%
2003 -1.2% Finance +6.3%
2004 +.94% Steel +13.2%
2005 +.69% Precious Metals +15.9%
2006 +2.46% Textiles +8.7%
So, there are always opportunities, even in down markets, and the focus of our sector rotation efforts is to pinpoint those sectors outperforming the market and take advantage of those opportunities that constantly appear.
The View from 35,000 Feet
The big news this week was the weekly jobs report out on Friday that showed an unexpected drop of 4,000 non farm payroll jobs instead of the forecast 100,000 increase. This was the first drop since August, 2003, and sent the markets reeling since it came on top of the well publicized sub prime credit crunch and deflating housing bubble.
Clearly, the economy is slowing and the chance of a recession is rising as the wealth effect from rising housing prices and easy credit quickly evaporates. And now all eyes turn to the Federal Reserve to see if “Gentle Ben” and his cohorts can offset the effects of a slowing economy, a credit crisis and a collapsing housing market.
And we’ll get our first look at what the Fed has in mind as Fed Governor Fredric Mishkin, San Francisco Fed President Janet Yellin and “Gentle Ben” himself all give speeches early this week. Janet Yellen will kick off the round of speeches on Monday Morning at the National Association for Business Economics meeting in San Francisco; Mishkin, a voting member on the Open Market Committee, will speak Monday night at New York University, and “Gentle Ben” will speak in Berlin on Tuesday.
At the recent Fed conclave in Jackson Hole, Mishkin said that, “we have the tools to limit the negative effects on the economy from a housing price decline,” and market watchers will be watching his speech carefully for more details about how the Fed plans to deploy those tools.
The futures market is factoring in a 75% chance of a rate cut at the September 18th Fed meeting and some analysts are forecasting a rate cut even earlier than that. Almost everyone thinks a rate cut is a foregone conclusion and now the speculation lies around whether it will be a 25 or 50 basis point reduction.
Clearly what the Fed does and says over the next 9 days will determine whether or not September will be good or bad for stock market investors around the world.
Sector Spotlight
Precious metals, natural resources and energy led the way this week and laggards were home construction, real estate and the dollar.
We have no changes to our positions or stops this week.
Yesterday, my younger son and I made our traditional fall expedition to the summit of South Sisters Mountain just outside of Bend. At 10,358 feet, it’s a towering volcano and the roundtrip climb is 12 miles with an elevation gain of 5,000 feet. Going up is a taxing, aerobic grind and coming down is tough on the old knees, feet and ankles.
But, the summit is the reward with commanding views of the Cascade peaks of Middle Sisters, North Sisters, Mount Washington, Jefferson, Hood and Adams, the Cascade Lakes region and Bend off to the east. There’s always a great photo op, plenty of trail mix and a stunning sunset on the way down, and yesterday was no exception.
As we descended into the darkness, I thought of how similar climbing South Sisters is to stock market investing and sector rotation investing in particular. It’s not easy, oftentimes challenging and not everyone can be successful, but the rewards of the summit far outweigh the effort needed to get there.
Have a great Sunday afternoon and upcoming week.
Your Partner in Prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://wallstreetsectorselector.com
Hi, Friends,
Much has been written this week about how September is the worst month of the year for stock market traders and that historically this month posts the biggest % losses on the S&P, Dow and NASDAQ. And, in fact, the S@P has been down 56% of the time in September since 1975.
But, for us as sector traders, we have to look beneath “the market” since the whole idea of sector trading is to find the best performing sectors, sectors that are outperforming the market, focus on those, and so enhance our opportunities to outperform the averages.
Looking at past Septembers back to 1999, we find that the best performing sectors have outperformed the market by significant percentages. Here’s a comparison between the S&P and the best performing sectors in September dating back to 1999.
Year S@P 500 Best Performing Sector
1999 -2.85% Precious Metals +29.2%
2000 -5.34% Utilities +10.4%
2001 -8.17% Precious Metals +3.4%
2002 -11% Gaming +7.3%
2003 -1.2% Finance +6.3%
2004 +.94% Steel +13.2%
2005 +.69% Precious Metals +15.9%
2006 +2.46% Textiles +8.7%
So, there are always opportunities, even in down markets, and the focus of our sector rotation efforts is to pinpoint those sectors outperforming the market and take advantage of those opportunities that constantly appear.
The View from 35,000 Feet
The big news this week was the weekly jobs report out on Friday that showed an unexpected drop of 4,000 non farm payroll jobs instead of the forecast 100,000 increase. This was the first drop since August, 2003, and sent the markets reeling since it came on top of the well publicized sub prime credit crunch and deflating housing bubble.
Clearly, the economy is slowing and the chance of a recession is rising as the wealth effect from rising housing prices and easy credit quickly evaporates. And now all eyes turn to the Federal Reserve to see if “Gentle Ben” and his cohorts can offset the effects of a slowing economy, a credit crisis and a collapsing housing market.
And we’ll get our first look at what the Fed has in mind as Fed Governor Fredric Mishkin, San Francisco Fed President Janet Yellin and “Gentle Ben” himself all give speeches early this week. Janet Yellen will kick off the round of speeches on Monday Morning at the National Association for Business Economics meeting in San Francisco; Mishkin, a voting member on the Open Market Committee, will speak Monday night at New York University, and “Gentle Ben” will speak in Berlin on Tuesday.
At the recent Fed conclave in Jackson Hole, Mishkin said that, “we have the tools to limit the negative effects on the economy from a housing price decline,” and market watchers will be watching his speech carefully for more details about how the Fed plans to deploy those tools.
The futures market is factoring in a 75% chance of a rate cut at the September 18th Fed meeting and some analysts are forecasting a rate cut even earlier than that. Almost everyone thinks a rate cut is a foregone conclusion and now the speculation lies around whether it will be a 25 or 50 basis point reduction.
Clearly what the Fed does and says over the next 9 days will determine whether or not September will be good or bad for stock market investors around the world.
Sector Spotlight
Precious metals, natural resources and energy led the way this week and laggards were home construction, real estate and the dollar.
We have no changes to our positions or stops this week.
Yesterday, my younger son and I made our traditional fall expedition to the summit of South Sisters Mountain just outside of Bend. At 10,358 feet, it’s a towering volcano and the roundtrip climb is 12 miles with an elevation gain of 5,000 feet. Going up is a taxing, aerobic grind and coming down is tough on the old knees, feet and ankles.
But, the summit is the reward with commanding views of the Cascade peaks of Middle Sisters, North Sisters, Mount Washington, Jefferson, Hood and Adams, the Cascade Lakes region and Bend off to the east. There’s always a great photo op, plenty of trail mix and a stunning sunset on the way down, and yesterday was no exception.
As we descended into the darkness, I thought of how similar climbing South Sisters is to stock market investing and sector rotation investing in particular. It’s not easy, oftentimes challenging and not everyone can be successful, but the rewards of the summit far outweigh the effort needed to get there.
Have a great Sunday afternoon and upcoming week.
Your Partner in Prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://wallstreetsectorselector.com
Sunday, August 26, 2007
Switching from Wealth Preservation to Wealth Accumulation
Switching from Wealth Preservation to Wealth Accumulation: Wall Street Sector Selector
Hi, Friends,
Like a fast moving hurricane, this violent stock market correction that started in mid-July tore through the world’s stock markets and erased nearly 11% of wealth from investors as measured from peak to valley by the U.S. Total Market Index.
Since putting in a bottom on August 16th, the U.S. Total Market Index has rallied 4.8% off its lows and the S&P 500 now stands with a 4.4% gain Year to Date.
At Wall Street Sector Selector, we now stand with a net gain of 6.69% Year to Date and 4.9% realized and unrealized gains for all initial trades since our first public trade on April 2, 2007.
This has been a period of historic volatility, of central bank intervention in economies and stock markets around the world, and volatility and wild price swings not seen since the September 11th attacks on the United States.
And now it may almost be time to switch from wealth preservation to wealth accumulation. Our indicators tell us that very likely we’re on the brink of what appears to be a unique buying opportunity, in fact, one of the best buying opportunities since 2003.
And we’ll be ready to capitalize on this switch from wealth preservation to wealth accumulation when, and if, this new leg upward gets underway.
But first, these recent wild swings in the market offer us a perfect opportunity to review the Wall Street Sector Selector trading methodology and better understand how and why it works and why we’ll be ready for the next phase of market activity, whatever it may be.
During up market periods, the system is designed to identify and invest in sectors that are outperforming the general markets and so make greater profits than we could by just investing in an index or a random basket of stocks or Exchange Traded Funds.
And we do this by deploying a combination of measurements like relative strength, momentum, trend and capital flows that add up to what we call the “Greed and Fear Index.” When greed is in control, we buy, and when fear is control, as it has been these last two months, we sell.
Conversely, during market declines, we will either step aside to cash positions or attempt to “short” the market and profit during declines so that we can protect our capital from significant declines or even profit when the market goes down.
During July and August we were able to do both of these things with some success, although as we mentioned in last week’s letter, the volatility in August impacted our performance and success on the “short side.”
But the key thing to understand here is that this system can and will take occasional losses but is designed to limit maximum monthly losses to -5 to -6%. Nobody likes to lose 5%, and some people might ask, “Why not just ride it out; it will come back?” but this is where we part company with the general media and the conventional wisdom constantly touted in the financial press.
People who practiced buy and hold in March, 2000, are still just slightly below break even 7 years later as measured by the S&P 500. They are approaching a lost decade of their investing lives!
And, to us, as active investors, this is simply unacceptable, especially since it didn’t have to be that way.
Because an active trading system, like Wall Street Sector Selector, could have stepped aside, stepped out of harm’s way when the market rolled over in March, 2000, and then when the bear market was confirmed, profited on the way down as the S&P declined more than 40% from top to bottom.
Doesn’t this just make a lot more sense than losing a decade of your investing life?
However, for now, it does appear that the fast moving correction of July and August is blowing over and we’re setting up for the next leg upwards. This recent correction turned out (in hindsight) to not be “the big one,” and so we suffered a small loss in August to protect ourselves from what could have easily turned into double digit losses in a wealth destroying bear market. And this will always be the case during market “corrections” because it’s impossible to tell ahead of time if it’s a market correction or the start of a new bear market.
But make no mistake. One day, maybe sooner, maybe later, there will be another bear market that will destroy trillions of dollars of wealth and devastate the hopes and dreams of the millions of investors who won’t be prepared for its overwhelming, destructive fury.
My job is to make more money for my subscribers than we could make in the general market during up times and lose less, or even make money, during down times. In other words, when times are good, we will focus our efforts on return on investment, and when times are bad, we will focus on return of investment.
We’re on the threshold of a great opportunity
As I said a moment ago, right now, all of our indicators point to the strong likelihood that the market has put in a bottom and that this was just a correction in an ongoing bull market. It’s very likely that the market will test the lows of August 16th at least once, if not twice, and that the volatility we’ve seen recently will continue for a few more weeks.
But if this is indeed a bottom, we’re definitely nearing the best buying opportunity we’ve seen in many years in terms of risk/reward, and we stand ready to deploy our capital into those sectors which show the greatest promise relative to the overall market.
Sector Spotlight
Nearly all sectors continue to be in short or long term downtrends with Treasury Bonds being the only notable exception with the usual flight to quality that we always see during periods of market stress. Interesting upstarts this month include the financial and real estate sectors which have been severely beaten down so far all year but now are showing signs of returning to solid performance.
The Way Forward from Wealth Preservation to Wealth Accumulation
Our plan, as always, is to stick to our plan. We will wait patiently for our indicators to confirm that the market has, in fact, put in a bottom and is ready for a new leg up.
When that happens, we will immediately alert you.
Wall Street Sector Selector generally only establishes new positions at the beginning of a new month, but at a crucial turning point like this, it might become necessary to establish new positions at some other point during September.
And so our tactical trading strategy is this:
We will not establish any new position during the last week of August since it’s a holiday shortened week leading into a three day weekend and there are a number of important economic reports due out late next week.
Over Labor Day, we will reanalyze our indicators and complete our usual monthly portfolio rebalance which you will receive in an email on Monday, September 3rd. Hopefully, that will take care of us for the month.
However, if our indicators do not indicate a “buy” on September 3rd, we will remind you next weekend to carefully watch your email every weekend during the month of September for any mid-month additions to our portfolios. Should confirmation of a new uptrend occur at any time during September, we will send you a weekend position update with the new positions the system has identified.
Again, this is not our usual practice, but these are not usual times, and it’s important that we don’t miss this next uptrend, if and when it is confirmed.
We will remind everyone of this again next weekend and make sure we all fully understand our strategy moving forward.
Today, I’m flying back from Florida today with my family after a delightful week on Bonita Beach in the Naples/Fort Meyers area. As I mentioned last week, we’ve been going there for more than 30 years and this visit was as much fun as always.
We “chilled” on the beach as my 14 year old likes to say and we were “hanging” in the pool as my 19 year old says. We spent a wonderful day fishing offshore for the “wily grouper” and I caught one that was just ¾ of an inch too short to be a keeper.
But nevertheless, we ate well, too well, and my wife and I will be hitting our diets hard in September as we indulged in live lobster, fresh fish we caught ourselves, mussels marinara and at least three trips to Royal Scoop, a small, out of the way ice cream store that has the best ice cream I’ve ever found anywhere in the world. If you’re ever in Naples, Royal Scoop is a must stop.
I hope you enjoy the rest of your weekend, the last week of summer and the holiday weekend that lies ahead.
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://wallstreetsectorselector.com
Hi, Friends,
Like a fast moving hurricane, this violent stock market correction that started in mid-July tore through the world’s stock markets and erased nearly 11% of wealth from investors as measured from peak to valley by the U.S. Total Market Index.
Since putting in a bottom on August 16th, the U.S. Total Market Index has rallied 4.8% off its lows and the S&P 500 now stands with a 4.4% gain Year to Date.
At Wall Street Sector Selector, we now stand with a net gain of 6.69% Year to Date and 4.9% realized and unrealized gains for all initial trades since our first public trade on April 2, 2007.
This has been a period of historic volatility, of central bank intervention in economies and stock markets around the world, and volatility and wild price swings not seen since the September 11th attacks on the United States.
And now it may almost be time to switch from wealth preservation to wealth accumulation. Our indicators tell us that very likely we’re on the brink of what appears to be a unique buying opportunity, in fact, one of the best buying opportunities since 2003.
And we’ll be ready to capitalize on this switch from wealth preservation to wealth accumulation when, and if, this new leg upward gets underway.
But first, these recent wild swings in the market offer us a perfect opportunity to review the Wall Street Sector Selector trading methodology and better understand how and why it works and why we’ll be ready for the next phase of market activity, whatever it may be.
During up market periods, the system is designed to identify and invest in sectors that are outperforming the general markets and so make greater profits than we could by just investing in an index or a random basket of stocks or Exchange Traded Funds.
And we do this by deploying a combination of measurements like relative strength, momentum, trend and capital flows that add up to what we call the “Greed and Fear Index.” When greed is in control, we buy, and when fear is control, as it has been these last two months, we sell.
Conversely, during market declines, we will either step aside to cash positions or attempt to “short” the market and profit during declines so that we can protect our capital from significant declines or even profit when the market goes down.
During July and August we were able to do both of these things with some success, although as we mentioned in last week’s letter, the volatility in August impacted our performance and success on the “short side.”
But the key thing to understand here is that this system can and will take occasional losses but is designed to limit maximum monthly losses to -5 to -6%. Nobody likes to lose 5%, and some people might ask, “Why not just ride it out; it will come back?” but this is where we part company with the general media and the conventional wisdom constantly touted in the financial press.
People who practiced buy and hold in March, 2000, are still just slightly below break even 7 years later as measured by the S&P 500. They are approaching a lost decade of their investing lives!
And, to us, as active investors, this is simply unacceptable, especially since it didn’t have to be that way.
Because an active trading system, like Wall Street Sector Selector, could have stepped aside, stepped out of harm’s way when the market rolled over in March, 2000, and then when the bear market was confirmed, profited on the way down as the S&P declined more than 40% from top to bottom.
Doesn’t this just make a lot more sense than losing a decade of your investing life?
However, for now, it does appear that the fast moving correction of July and August is blowing over and we’re setting up for the next leg upwards. This recent correction turned out (in hindsight) to not be “the big one,” and so we suffered a small loss in August to protect ourselves from what could have easily turned into double digit losses in a wealth destroying bear market. And this will always be the case during market “corrections” because it’s impossible to tell ahead of time if it’s a market correction or the start of a new bear market.
But make no mistake. One day, maybe sooner, maybe later, there will be another bear market that will destroy trillions of dollars of wealth and devastate the hopes and dreams of the millions of investors who won’t be prepared for its overwhelming, destructive fury.
My job is to make more money for my subscribers than we could make in the general market during up times and lose less, or even make money, during down times. In other words, when times are good, we will focus our efforts on return on investment, and when times are bad, we will focus on return of investment.
We’re on the threshold of a great opportunity
As I said a moment ago, right now, all of our indicators point to the strong likelihood that the market has put in a bottom and that this was just a correction in an ongoing bull market. It’s very likely that the market will test the lows of August 16th at least once, if not twice, and that the volatility we’ve seen recently will continue for a few more weeks.
But if this is indeed a bottom, we’re definitely nearing the best buying opportunity we’ve seen in many years in terms of risk/reward, and we stand ready to deploy our capital into those sectors which show the greatest promise relative to the overall market.
Sector Spotlight
Nearly all sectors continue to be in short or long term downtrends with Treasury Bonds being the only notable exception with the usual flight to quality that we always see during periods of market stress. Interesting upstarts this month include the financial and real estate sectors which have been severely beaten down so far all year but now are showing signs of returning to solid performance.
The Way Forward from Wealth Preservation to Wealth Accumulation
Our plan, as always, is to stick to our plan. We will wait patiently for our indicators to confirm that the market has, in fact, put in a bottom and is ready for a new leg up.
When that happens, we will immediately alert you.
Wall Street Sector Selector generally only establishes new positions at the beginning of a new month, but at a crucial turning point like this, it might become necessary to establish new positions at some other point during September.
And so our tactical trading strategy is this:
We will not establish any new position during the last week of August since it’s a holiday shortened week leading into a three day weekend and there are a number of important economic reports due out late next week.
Over Labor Day, we will reanalyze our indicators and complete our usual monthly portfolio rebalance which you will receive in an email on Monday, September 3rd. Hopefully, that will take care of us for the month.
However, if our indicators do not indicate a “buy” on September 3rd, we will remind you next weekend to carefully watch your email every weekend during the month of September for any mid-month additions to our portfolios. Should confirmation of a new uptrend occur at any time during September, we will send you a weekend position update with the new positions the system has identified.
Again, this is not our usual practice, but these are not usual times, and it’s important that we don’t miss this next uptrend, if and when it is confirmed.
We will remind everyone of this again next weekend and make sure we all fully understand our strategy moving forward.
Today, I’m flying back from Florida today with my family after a delightful week on Bonita Beach in the Naples/Fort Meyers area. As I mentioned last week, we’ve been going there for more than 30 years and this visit was as much fun as always.
We “chilled” on the beach as my 14 year old likes to say and we were “hanging” in the pool as my 19 year old says. We spent a wonderful day fishing offshore for the “wily grouper” and I caught one that was just ¾ of an inch too short to be a keeper.
But nevertheless, we ate well, too well, and my wife and I will be hitting our diets hard in September as we indulged in live lobster, fresh fish we caught ourselves, mussels marinara and at least three trips to Royal Scoop, a small, out of the way ice cream store that has the best ice cream I’ve ever found anywhere in the world. If you’re ever in Naples, Royal Scoop is a must stop.
I hope you enjoy the rest of your weekend, the last week of summer and the holiday weekend that lies ahead.
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://wallstreetsectorselector.com
Saturday, July 28, 2007
We Made Money This Week; Now You Can Too
Hi, Friends,
It certainly was a wild, but not unexpected week on Wall Street.
I’m pleased to be able to report that Wall Street Sector Selector was up 2.24% this week and is up 4.1% for the month compared to -5% and -3% respectively for the S@P 500.
These are difficult days for investors and, as we’ve previously discussed, we expect this volatility to continue. In fact, I think we can look for a sharply lower open on Monday based on the last few minutes of trading during the regular session, after hours trading and the way the futures looked late Friday.
The View from 35,000 Feet
In a nutshell, the world markets got bombed last week.
The Dow had its worst week in four years, down 4.2% for the week. So much for the record set just one week ago.
The S@P was down 5% and the NASDAQ - 4.6% as the sub prime contagion spread across the major indexes.
We’ve been reporting for several weeks that the sub prime meltdown would most likely spread, and now clearly that is coming to pass. And it’s coming on two fronts.
The first front is that major players are going to be writing down losses from bad sub-prime loans. In fact, watch for some major hedge fund meltdowns in the coming weeks as these bad loans come home to roost. In fact, the first whiff of smoke is already in the air as an Australian hedge fund partially owned by Dutch financial gorilla ABN reported problems from exposure to sub prime loans and rumors coming from Japanese and German funds also suffering similar losses.
All of this was summed up succinctly by Mark Zandi, chief economist for Moody’s Economy.com who said, “The problems in the U.S. sub prime mortgage market could spiral out of control into a global financial crisis,” and he goes on to say, “If there’s another major hedge fund that does stumble, that could elicit a crisis of confidence and a global shock. The potential is quite high.”
But the second and possibly bigger problem for the general markets comes from the swift and significant drying up of capital on the global credit markets. Much of the recent run up in stock prices has been fueled by private equity deals, leveraged buyouts, and stock buybacks. In just a matter of weeks, the easy credit that fuels those deals seems to have almost instantly evaporated.
Deals involving Daimler Chrysler, Allison Transmission, Home Depot, Tyco and Cadbury Schweppes have been delayed, pulled or revised due to the rapidly changing credit markets. Strategist Barry Ritholtz writes, “The credit window is now closed,” and this will no doubt be bad news for a stock market used to the adrenalin of easy money.
And finally, on the currency markets, the dollar had a mixed week, up 1.4% against the euro but losing 2.1% to the yen. And a correction from last week when I wrote that I could remember a 1 to 2 exchange rate between the U.S. Dollar and the British Pound. A careful reader gently corrected me that I might remember a 1.50 to 1 but never a 2 to l, and his statistics are much superior to my memory. My apologies.
Sector Spotlight
There were virtually no winners on the long side this week except for the Rydex Strengthening Dollar Index. Notable losers included Real Estate down 8,9%, Oil and Gas down 8.4%, and the bottom feeder, Home Construction down 11.1%.
This weekend, I’m in Portland for Oregon State Swimming Championships with my young son. So far, so good with three Top 5 finishes. Next week it’s on to U.S. Nationals in Indianapolis with my older son. Going to swim meets is what I seem to be doing right now instead of normal summer pursuits like fishing, water skiing or travel.
Next week promises to be exciting. We will rebalance the portfolio after market close on the 31st so watch you email for the Portfolio Update. Enjoy your weekend and the fleeting days of summer.
Your Partner in Prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
It certainly was a wild, but not unexpected week on Wall Street.
I’m pleased to be able to report that Wall Street Sector Selector was up 2.24% this week and is up 4.1% for the month compared to -5% and -3% respectively for the S@P 500.
These are difficult days for investors and, as we’ve previously discussed, we expect this volatility to continue. In fact, I think we can look for a sharply lower open on Monday based on the last few minutes of trading during the regular session, after hours trading and the way the futures looked late Friday.
The View from 35,000 Feet
In a nutshell, the world markets got bombed last week.
The Dow had its worst week in four years, down 4.2% for the week. So much for the record set just one week ago.
The S@P was down 5% and the NASDAQ - 4.6% as the sub prime contagion spread across the major indexes.
We’ve been reporting for several weeks that the sub prime meltdown would most likely spread, and now clearly that is coming to pass. And it’s coming on two fronts.
The first front is that major players are going to be writing down losses from bad sub-prime loans. In fact, watch for some major hedge fund meltdowns in the coming weeks as these bad loans come home to roost. In fact, the first whiff of smoke is already in the air as an Australian hedge fund partially owned by Dutch financial gorilla ABN reported problems from exposure to sub prime loans and rumors coming from Japanese and German funds also suffering similar losses.
All of this was summed up succinctly by Mark Zandi, chief economist for Moody’s Economy.com who said, “The problems in the U.S. sub prime mortgage market could spiral out of control into a global financial crisis,” and he goes on to say, “If there’s another major hedge fund that does stumble, that could elicit a crisis of confidence and a global shock. The potential is quite high.”
But the second and possibly bigger problem for the general markets comes from the swift and significant drying up of capital on the global credit markets. Much of the recent run up in stock prices has been fueled by private equity deals, leveraged buyouts, and stock buybacks. In just a matter of weeks, the easy credit that fuels those deals seems to have almost instantly evaporated.
Deals involving Daimler Chrysler, Allison Transmission, Home Depot, Tyco and Cadbury Schweppes have been delayed, pulled or revised due to the rapidly changing credit markets. Strategist Barry Ritholtz writes, “The credit window is now closed,” and this will no doubt be bad news for a stock market used to the adrenalin of easy money.
And finally, on the currency markets, the dollar had a mixed week, up 1.4% against the euro but losing 2.1% to the yen. And a correction from last week when I wrote that I could remember a 1 to 2 exchange rate between the U.S. Dollar and the British Pound. A careful reader gently corrected me that I might remember a 1.50 to 1 but never a 2 to l, and his statistics are much superior to my memory. My apologies.
Sector Spotlight
There were virtually no winners on the long side this week except for the Rydex Strengthening Dollar Index. Notable losers included Real Estate down 8,9%, Oil and Gas down 8.4%, and the bottom feeder, Home Construction down 11.1%.
This weekend, I’m in Portland for Oregon State Swimming Championships with my young son. So far, so good with three Top 5 finishes. Next week it’s on to U.S. Nationals in Indianapolis with my older son. Going to swim meets is what I seem to be doing right now instead of normal summer pursuits like fishing, water skiing or travel.
Next week promises to be exciting. We will rebalance the portfolio after market close on the 31st so watch you email for the Portfolio Update. Enjoy your weekend and the fleeting days of summer.
Your Partner in Prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
Saturday, July 21, 2007
Wall Street Sector Selector North: S@P 500 South
Hi, Friends.
I was in London this week where I again experienced firsthand the record breaking weakness of the U.S. dollar. It’s now $2.08 for one British Pound which makes for $5.00 lattes and draft beers. A dinner practically requires a second mortgage on your house and a decent theatre ticket is north of $300.
I wistfully remember the time when you could get 2 British Pounds for $1.00! But such is the outcome of 26 year lows against the Pound and all time record lows against the Eurodollar.
The View from 35,000 Feet
It was a gloomy week in the markets as all major indexes were down with the S@P shedding 1.5% for the week. The weak dollar and the emerging sub prime woes were the catalysts along with mediocre earnings reports from Google and Caterpillar.
Sub Prime Morass Deepens
As we’ve been reporting for weeks, the sub prime lending morass deepens daily and this week “Gentle Ben” Bernanke, the U.S. Federal Reserve Chief finally stepped up to the problem in his testimony to Congress when he said there were going to “significant losses” in the sub prime sector and he quantified that statement with estimates of $50 to $100 Billion.
No kidding, Ben. This isn’t a surprise and finally the Feds are going to examine these volatile lending practices. Of course, this is after the two Bear Sterns hedge funds have gone belly up, and investors in one, the High Grade Structured Credit Strategies Enhanced Leverage Fund, received a troubling letter that said their fund had “vvery little value.” Don’t you just hate getting letters like that?”
And Barclays, the giant European bank is considering sing Bear Sterns for $400 Million for losses incurred in those funds while S@P downgraded some European collateralized mortgage obligations in Europe as the sub prime cancer spreads.
Again, and this is key, if the only people getting hurt by these loans were poor people living in poor neighborhoods, Wall Street and world stock markets wouldn’t care. But the “smart money” is up to their ears in these “securities,” and the evil winds of over-leverage and foreclosure are just beginning to blow.
Sector Spotlight
The Financials took a bath this week; the Russell and S@P swooned, real estate and home builders continued their long fall, and it was a good week for oil and precious metals.
We continue doing well with our Ipositions as earnings season continues this week and analysts predict a less than rosy set of reports.
I’m home for just a couple of days and planning to bike the river trail in Bend with my young son before heading to Nagoya next week. Enjoy some time with your family as summer is slipping by all too quickly.
Your partner in prosperity,
John Nyaradi
http://www.wall-street-sector-selector.com
I was in London this week where I again experienced firsthand the record breaking weakness of the U.S. dollar. It’s now $2.08 for one British Pound which makes for $5.00 lattes and draft beers. A dinner practically requires a second mortgage on your house and a decent theatre ticket is north of $300.
I wistfully remember the time when you could get 2 British Pounds for $1.00! But such is the outcome of 26 year lows against the Pound and all time record lows against the Eurodollar.
The View from 35,000 Feet
It was a gloomy week in the markets as all major indexes were down with the S@P shedding 1.5% for the week. The weak dollar and the emerging sub prime woes were the catalysts along with mediocre earnings reports from Google and Caterpillar.
Sub Prime Morass Deepens
As we’ve been reporting for weeks, the sub prime lending morass deepens daily and this week “Gentle Ben” Bernanke, the U.S. Federal Reserve Chief finally stepped up to the problem in his testimony to Congress when he said there were going to “significant losses” in the sub prime sector and he quantified that statement with estimates of $50 to $100 Billion.
No kidding, Ben. This isn’t a surprise and finally the Feds are going to examine these volatile lending practices. Of course, this is after the two Bear Sterns hedge funds have gone belly up, and investors in one, the High Grade Structured Credit Strategies Enhanced Leverage Fund, received a troubling letter that said their fund had “vvery little value.” Don’t you just hate getting letters like that?”
And Barclays, the giant European bank is considering sing Bear Sterns for $400 Million for losses incurred in those funds while S@P downgraded some European collateralized mortgage obligations in Europe as the sub prime cancer spreads.
Again, and this is key, if the only people getting hurt by these loans were poor people living in poor neighborhoods, Wall Street and world stock markets wouldn’t care. But the “smart money” is up to their ears in these “securities,” and the evil winds of over-leverage and foreclosure are just beginning to blow.
Sector Spotlight
The Financials took a bath this week; the Russell and S@P swooned, real estate and home builders continued their long fall, and it was a good week for oil and precious metals.
We continue doing well with our Ipositions as earnings season continues this week and analysts predict a less than rosy set of reports.
I’m home for just a couple of days and planning to bike the river trail in Bend with my young son before heading to Nagoya next week. Enjoy some time with your family as summer is slipping by all too quickly.
Your partner in prosperity,
John Nyaradi
http://www.wall-street-sector-selector.com
Thursday, July 5, 2007
Will the Consumer Collapse?
Hi, Friends,
Happy 4th of July! I trust you’re having a good weekend and were able to convert it into a long one to enjoy the mid-summer break.
The celebration of America’s birth is always a fun time filled with barbeques and fireworks, but it’s also a good time to reflect on what that group of extraordinary men we call the Founding Fathers actually accomplished.
The American experiment in democracy is unprecedented in human history, and on the 4th I always think of George Washington’s chair in Independence Hall in Philadelphia. A picture of the sun on the horizon with its rays beaming across the earth is engraved on the back of that chair, and looking at the carving, Washington once remarked, “Is it a rising or setting sun for the United States?”
Of course it was a rising sun, and even today, with a seemingly endless list of problems and challenges, I believe that the sun is still rising.
Today we’re going to take a look at the American consumer who drives the economy and is in a classic squeeze play.
Here are some of the troubling facts from recent reports:
Ø Real Estate stays in the tank: Home sales down in May, again, by 3.5%. Home prices down by 2.7% year over year, the biggest yearly drop in 16 years. Housing market index, the barometer of the housing industry, at a 16 year low. Home mortgage delinquencies on the rise and the sub prime situation isn’t over yet. As one noted analyst remarked regarding the Bear Sterns meltdown and the sub prime threat, “If you see one cockroach come out of the wall, there are usually more.”
Ø Consumer Spending Slows: Retail Sales are up a tepid 1.2% year over year. New car sales down six straight months ending in June.
Ø Prices Up; Incomes Down: Consumer prices rose a blistering .5% in May, biggest one month gain in 17 months; take home income, adjusted for inflation continues to fall, and as we discussed last week, personal savings rate has remained negative for 26 months in a row.
So, the question is, “How long can this keep going on?”
I don’t have a crystal ball, of course, but logic tells me that sometime the consumer is going to have maxed out his credit cards, home equity lines of credit and tapped out his savings. And when that happens, he’ll only have two choices. Downsize his standard of living, which is painful, un-American and decidedly recessionary, or make more money through pay raises or working harder, longer or smarter. As this situation wears on, the old joke becomes even more pertinent, “What I really need are two working wives.”
So, we’ll have to see where it goes from here.
As for the stock market, we’re at a pivotal point as the corn struggles to reach “knee high by the 4th of July.” The overall trend is still up but clearly, as we said last week, short term weakness is rampant. The bulls and the bears are always in a tug of war, but right now there’s more grunting than usual going on.
Wall Street Sector Selector maintains a hedged position for this month as this tug of war plays out. For the 2nd Quarter ending June 30, we reported a 6.73% profit compared to 5.8% for the S@P 500, with a total of 10 trades and 70% of those returning gains. Summer is a tough time to make money in the markets, but, of course, we’re hoping for a positive July.
I’m heading for Chicago today, starting a brutal three week travel schedule, but we had a wonderful mid-week holiday. On Wednesday, my young son and I went on our annual “fishathon,” where we go to South Twin Lake for some lake fishing from a boat, Fall River for fly fishing and then on to Shevlin Pond, where you have to be 17 or under to get a line wet.
The trout gods were good to us and we had rainbows baked in a wonderful Greek olive oil and lemon recipe on the deck looking out at Mt. Bachelor in the sunset. On the 4th, we made our traditional trek to Drake Park in Bend for some lunch and music on the grass by the Deschutes River followed by fireworks at night from the top of Pilot Butte. There are many joys to living in Oregon, in general, and in Bend, in particular, and 4th of July is certainly near the top of my favorites list.
Have a great weekend wherever your travels may take you, and take a moment to celebrate the rising sun and the unprecedented opportunities and freedoms we enjoy as Americans.
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://www.wall-street-sector-selector.com/
Happy 4th of July! I trust you’re having a good weekend and were able to convert it into a long one to enjoy the mid-summer break.
The celebration of America’s birth is always a fun time filled with barbeques and fireworks, but it’s also a good time to reflect on what that group of extraordinary men we call the Founding Fathers actually accomplished.
The American experiment in democracy is unprecedented in human history, and on the 4th I always think of George Washington’s chair in Independence Hall in Philadelphia. A picture of the sun on the horizon with its rays beaming across the earth is engraved on the back of that chair, and looking at the carving, Washington once remarked, “Is it a rising or setting sun for the United States?”
Of course it was a rising sun, and even today, with a seemingly endless list of problems and challenges, I believe that the sun is still rising.
Today we’re going to take a look at the American consumer who drives the economy and is in a classic squeeze play.
Here are some of the troubling facts from recent reports:
Ø Real Estate stays in the tank: Home sales down in May, again, by 3.5%. Home prices down by 2.7% year over year, the biggest yearly drop in 16 years. Housing market index, the barometer of the housing industry, at a 16 year low. Home mortgage delinquencies on the rise and the sub prime situation isn’t over yet. As one noted analyst remarked regarding the Bear Sterns meltdown and the sub prime threat, “If you see one cockroach come out of the wall, there are usually more.”
Ø Consumer Spending Slows: Retail Sales are up a tepid 1.2% year over year. New car sales down six straight months ending in June.
Ø Prices Up; Incomes Down: Consumer prices rose a blistering .5% in May, biggest one month gain in 17 months; take home income, adjusted for inflation continues to fall, and as we discussed last week, personal savings rate has remained negative for 26 months in a row.
So, the question is, “How long can this keep going on?”
I don’t have a crystal ball, of course, but logic tells me that sometime the consumer is going to have maxed out his credit cards, home equity lines of credit and tapped out his savings. And when that happens, he’ll only have two choices. Downsize his standard of living, which is painful, un-American and decidedly recessionary, or make more money through pay raises or working harder, longer or smarter. As this situation wears on, the old joke becomes even more pertinent, “What I really need are two working wives.”
So, we’ll have to see where it goes from here.
As for the stock market, we’re at a pivotal point as the corn struggles to reach “knee high by the 4th of July.” The overall trend is still up but clearly, as we said last week, short term weakness is rampant. The bulls and the bears are always in a tug of war, but right now there’s more grunting than usual going on.
Wall Street Sector Selector maintains a hedged position for this month as this tug of war plays out. For the 2nd Quarter ending June 30, we reported a 6.73% profit compared to 5.8% for the S@P 500, with a total of 10 trades and 70% of those returning gains. Summer is a tough time to make money in the markets, but, of course, we’re hoping for a positive July.
I’m heading for Chicago today, starting a brutal three week travel schedule, but we had a wonderful mid-week holiday. On Wednesday, my young son and I went on our annual “fishathon,” where we go to South Twin Lake for some lake fishing from a boat, Fall River for fly fishing and then on to Shevlin Pond, where you have to be 17 or under to get a line wet.
The trout gods were good to us and we had rainbows baked in a wonderful Greek olive oil and lemon recipe on the deck looking out at Mt. Bachelor in the sunset. On the 4th, we made our traditional trek to Drake Park in Bend for some lunch and music on the grass by the Deschutes River followed by fireworks at night from the top of Pilot Butte. There are many joys to living in Oregon, in general, and in Bend, in particular, and 4th of July is certainly near the top of my favorites list.
Have a great weekend wherever your travels may take you, and take a moment to celebrate the rising sun and the unprecedented opportunities and freedoms we enjoy as Americans.
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://www.wall-street-sector-selector.com/
Wall Street Sector Selector Reports 2nd Quarter Profit
June 30, 2007
Wall Street Sector Selector Reports 2nd Quarter Profit
Hi, Friends,
Well, the 2nd Quarter is in the books and I’m happy to report that Wall Street Sector Selector recorded a second quarter profit of 6.73%, including both realized and unrealized gains.
The 2nd Quarter is history, and so it’s on to the “dog days of summer.”
The View from 35,000 Feet
Overall, the market is exhibiting marked weakness as of the end of June. This is typical seasonality but also is being aggravated by rising interest rates and oil at near record levels. The market is locked in a narrow range and all indications are that it will retest its 3 month lows in the weeks ahead.
For June, the S@P was down 1.78% but came in with a 5.8% gain for the Second Quarter. Year to date, the S@P is up 6%, the Dow up 7.6%, and the NASDAQ 7.8%. Since the markets historically average 7-8% per year, it might be fair to say that the best days of 2007 in the general markets all already behind us.
Looking ahead, Benjamin Reitzes, BMO Nesbitt Burns economist said, “Consumers seems to be buckling under the pressure of higher energy prices, the housing headwind and higher interest rates as real consumer spending increased a mediocre 1% in May and less than 2% for the second quarter.
After tax real incomes continue to fall while spending continued to rise and the personal savings rate dropped to -1.4% in April compared to 1.2% in May, the 26th straight month in which households spent more than their take home pay.
And, to further squeeze the consumer, the Fed Open Market Committee reported on Thursday that it “wasn’t convinced” that moderate core inflation would be sustained. Therefore, they kept interest rates steady and warned that higher inflation, not recession was the greatest threat to the economy.
All in all, not a pleasant recipe for the 40th Anniversary of the “Summer of Love.”
Sector Savvy
International sectors, particularly the Pacific Rim, continue showing dramatic strength, along with Emerging Economies and Energy. Profound weakness continues in Real Estate, Home Builders and Utilities as that sector responds to the threat of higher interest rates.
Greed and Fear Index
In the general markets, fear has taken control in the last few weeks, particularly since the big hit on June 7th in response to rising interest rates.
Our radar looks out 6-8 weeks, and the weather is decidedly stormy ahead.
This weekend we will rebalance the portfolio for July so watch for the Position Update to show up in your mailbox. As usual, we will be closing a couple of positions and letting a couple run.
Have a good weekend.
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://www.wallstreetsectorselector.com
Fascinations:
Historical best sectors in July—biotech, gold, utilities
July starts Nasdaq worst 4 months of year
Expect extreme volatility around July4th
Wall Street Sector Selector Reports 2nd Quarter Profit
Hi, Friends,
Well, the 2nd Quarter is in the books and I’m happy to report that Wall Street Sector Selector recorded a second quarter profit of 6.73%, including both realized and unrealized gains.
The 2nd Quarter is history, and so it’s on to the “dog days of summer.”
The View from 35,000 Feet
Overall, the market is exhibiting marked weakness as of the end of June. This is typical seasonality but also is being aggravated by rising interest rates and oil at near record levels. The market is locked in a narrow range and all indications are that it will retest its 3 month lows in the weeks ahead.
For June, the S@P was down 1.78% but came in with a 5.8% gain for the Second Quarter. Year to date, the S@P is up 6%, the Dow up 7.6%, and the NASDAQ 7.8%. Since the markets historically average 7-8% per year, it might be fair to say that the best days of 2007 in the general markets all already behind us.
Looking ahead, Benjamin Reitzes, BMO Nesbitt Burns economist said, “Consumers seems to be buckling under the pressure of higher energy prices, the housing headwind and higher interest rates as real consumer spending increased a mediocre 1% in May and less than 2% for the second quarter.
After tax real incomes continue to fall while spending continued to rise and the personal savings rate dropped to -1.4% in April compared to 1.2% in May, the 26th straight month in which households spent more than their take home pay.
And, to further squeeze the consumer, the Fed Open Market Committee reported on Thursday that it “wasn’t convinced” that moderate core inflation would be sustained. Therefore, they kept interest rates steady and warned that higher inflation, not recession was the greatest threat to the economy.
All in all, not a pleasant recipe for the 40th Anniversary of the “Summer of Love.”
Sector Savvy
International sectors, particularly the Pacific Rim, continue showing dramatic strength, along with Emerging Economies and Energy. Profound weakness continues in Real Estate, Home Builders and Utilities as that sector responds to the threat of higher interest rates.
Greed and Fear Index
In the general markets, fear has taken control in the last few weeks, particularly since the big hit on June 7th in response to rising interest rates.
Our radar looks out 6-8 weeks, and the weather is decidedly stormy ahead.
This weekend we will rebalance the portfolio for July so watch for the Position Update to show up in your mailbox. As usual, we will be closing a couple of positions and letting a couple run.
Have a good weekend.
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://www.wallstreetsectorselector.com
Fascinations:
Historical best sectors in July—biotech, gold, utilities
July starts Nasdaq worst 4 months of year
Expect extreme volatility around July4th
Monday, June 25, 2007
Is Sub Prime Cancer Terminal?
Hi, Friends,
I’m back from Japan, recovering from jet lag and looking forward to 10 days in the office to reset my body clock. One gets an interesting view of world markets from Asia as the trading day begins there and the continuing supremacy of the Chinese market dominates the region’s news. Wall Street Sector Selector maintains a profitable position in Asian markets which is a good thing considering recent developments in U.S. markets.
Last week we discussed how volatility in the stock markets would continue as the markets adjust to the prospect of higher interest rates, and this week certainly demonstrated that to be true.
Higher rates and inflation seem to be on the horizon, and it’s becoming increasingly clear that the sub-prime mortgage fallout is serious and spreading, in my view, a cancer that could be terminal for this bull market. And just as we had reached record highs in the S@P 500.
Here’s why this situation is so dismal:
Forecasts estimate that there will be more than 1 million mortgage foreclosures this year and that fully 60% of them will come from the sub-prime sector. In Minneapolis alone, foreclosures doubled in 2006 and will double again in 2007, fueled by record levels of sub-prime defaults.
To fully understand the extent of this exposure, one needs to understand that sub-prime mortgages went from $370 Million in 2000 to $1.17 Billion (with a Capital B!) in 2006. And now, almost 14% of these loans are in default.
So, who cares? These are mostly borrowers in inner cities who don’t have any financial or political clout anyway. Right? Wrong.
Not only is enormous human and economic cost coming to these local areas, but it turns out that big players like Bear Sterns, Merrill Lynch and major hedge funds have all bought into and repackaged these securities in search of market busting returns.
And now, these risky bets are coming home to roost. Bear Sterns has two hedge funds heavily involved in this market, and the largest of these is down 23% this year. The company has $20 Billion exposure in these 2 funds, a part of $1.8 Trillion in securities backed by sub-prime debt, and both are in danger of closing up shop.
These are big numbers now going south, and this week Merrill Lynch bailed out of their commitment to Bear Sterns, selling $850 Million in collateral. To make matters worse, these are illiquid securities and many, if not all of them, might be mis-priced and worth far less than current estimates show.
It doesn’t take a rocket scientist to figure out that if institutions like Bear Sterns and Merrill Lynch are getting burned and heading for the exits that the rest of the U.S. equity market might not be far behind.
And, of course, on top of the sub-prime problem, the real estate “slowdown” is turning into a dead stop as rates rise and U.S. homebuilders this week reported their lowest level of confidence in 16 years. With oil close to 9 month highs, the consumer is being squeezed on all fronts, especially those living large on their home equity lines of credit and still driving gas guzzling SUVs.
All these factors add up to a treacherous summer market as we pass the Summer Solstice and the longest day of the year.
And, no surprise, this week the markets reacted to all of these issues with the Dow shedding 2%, the S@P 1.9 % and the NASDAQ 1.4.
Wall Street Sector Selector lost 0.54%, once again demonstrating the power of relative strength, sentiment and the Greed and Fear Index.
Our goal is to make more than the indexes when the markets rise and lose less when they fall. So far, greed is still in control but fear continues to creep ever more strongly into the picture. The uptrend of this current bull market remains in place, although much more tenuously than at the beginning of the month.
We’ll be watching for opportunities that could develop as the market weakens because Wall Street Sector Selector is designed to be able to make money in falling as well as rising markets, something that “buy and hold” investors can’t do.
This weekend finds our family on the road. My young son and I are in Portland for a 4 day swim meet while my wife and #1 son are driving down I-5 to Santa Barbara. Mom’s helping him move into his first apartment which will be his base of operations for summer school and training for the U.S. National Swimming Championships in August.
I hope the first weekend of summer finds you well and having fun with friends and family.
Till next week,
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://wall-street-sector-selector.com
I’m back from Japan, recovering from jet lag and looking forward to 10 days in the office to reset my body clock. One gets an interesting view of world markets from Asia as the trading day begins there and the continuing supremacy of the Chinese market dominates the region’s news. Wall Street Sector Selector maintains a profitable position in Asian markets which is a good thing considering recent developments in U.S. markets.
Last week we discussed how volatility in the stock markets would continue as the markets adjust to the prospect of higher interest rates, and this week certainly demonstrated that to be true.
Higher rates and inflation seem to be on the horizon, and it’s becoming increasingly clear that the sub-prime mortgage fallout is serious and spreading, in my view, a cancer that could be terminal for this bull market. And just as we had reached record highs in the S@P 500.
Here’s why this situation is so dismal:
Forecasts estimate that there will be more than 1 million mortgage foreclosures this year and that fully 60% of them will come from the sub-prime sector. In Minneapolis alone, foreclosures doubled in 2006 and will double again in 2007, fueled by record levels of sub-prime defaults.
To fully understand the extent of this exposure, one needs to understand that sub-prime mortgages went from $370 Million in 2000 to $1.17 Billion (with a Capital B!) in 2006. And now, almost 14% of these loans are in default.
So, who cares? These are mostly borrowers in inner cities who don’t have any financial or political clout anyway. Right? Wrong.
Not only is enormous human and economic cost coming to these local areas, but it turns out that big players like Bear Sterns, Merrill Lynch and major hedge funds have all bought into and repackaged these securities in search of market busting returns.
And now, these risky bets are coming home to roost. Bear Sterns has two hedge funds heavily involved in this market, and the largest of these is down 23% this year. The company has $20 Billion exposure in these 2 funds, a part of $1.8 Trillion in securities backed by sub-prime debt, and both are in danger of closing up shop.
These are big numbers now going south, and this week Merrill Lynch bailed out of their commitment to Bear Sterns, selling $850 Million in collateral. To make matters worse, these are illiquid securities and many, if not all of them, might be mis-priced and worth far less than current estimates show.
It doesn’t take a rocket scientist to figure out that if institutions like Bear Sterns and Merrill Lynch are getting burned and heading for the exits that the rest of the U.S. equity market might not be far behind.
And, of course, on top of the sub-prime problem, the real estate “slowdown” is turning into a dead stop as rates rise and U.S. homebuilders this week reported their lowest level of confidence in 16 years. With oil close to 9 month highs, the consumer is being squeezed on all fronts, especially those living large on their home equity lines of credit and still driving gas guzzling SUVs.
All these factors add up to a treacherous summer market as we pass the Summer Solstice and the longest day of the year.
And, no surprise, this week the markets reacted to all of these issues with the Dow shedding 2%, the S@P 1.9 % and the NASDAQ 1.4.
Wall Street Sector Selector lost 0.54%, once again demonstrating the power of relative strength, sentiment and the Greed and Fear Index.
Our goal is to make more than the indexes when the markets rise and lose less when they fall. So far, greed is still in control but fear continues to creep ever more strongly into the picture. The uptrend of this current bull market remains in place, although much more tenuously than at the beginning of the month.
We’ll be watching for opportunities that could develop as the market weakens because Wall Street Sector Selector is designed to be able to make money in falling as well as rising markets, something that “buy and hold” investors can’t do.
This weekend finds our family on the road. My young son and I are in Portland for a 4 day swim meet while my wife and #1 son are driving down I-5 to Santa Barbara. Mom’s helping him move into his first apartment which will be his base of operations for summer school and training for the U.S. National Swimming Championships in August.
I hope the first weekend of summer finds you well and having fun with friends and family.
Till next week,
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://wall-street-sector-selector.com
Monday, June 18, 2007
How to Survive the Shock Market
How to Survive the “Shock Market”
Hi, Friends,
Nobody can deny that the last two weeks have been some kind of roller coaster ride in the “shock market,” the equity and bond markets of the world.
Last week’s plunge followed by this week’s rise proved to be a whiplash maker for all participants. And in the Internet age, these roller coaster rides are becoming more prevalent and ever more exciting. In February, we had the sell off caused by the drop in the Chinese market, and last week was the interest rate debacle in the bond market followed by this week’s recovery.
As investors, it becomes more important than ever to have a game plan for riding these waves that seem to be coming at us every four months or so. As I see it, here are the 3 keys to “shock market” success:
Don’t believe anything you read or hear in the financial press:
To me, the financial press should be taken as strictly entertainment. Here are a few quotes I read last week:
“Investors are throwing in the towel,” said Robert Auwaerter, head of fixed income investments at Vanguard.
“Such is the classic end to a bull market,” says Claran O’Hagen, head of strategy at SG Fixed Income.
“I expect 6.95 interest rates by year end due to more persistent inflationary pressures,” says Mervyn Kind, Governor of the Bank of England.
And here are a couple of quotes from this week:
"People are happy that core inflation came in better than expected," said Peter Cardillo, chief market economist at Avalon Partners. "It seems that the hike in food and energy prices was offset by the deterioration in the housing market."
"Core inflation is falling fast," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics
“Off to the races for the bulls! Wall Street records could fall Friday as traders cheer inflation gauge.” Marketwatch.com
So, what has changed since last week? Anyone making investment decisions based on what they read in the financial press is headed for disaster.
Have a clear understanding of your risk:
In markets like these, risk control is paramount. You need to understand what you have at risk and if you can sleep at night with that amount on the line. Also, a “buy and hold” approach will not let you control risk. Just ask the investors in the NASDAQ who are still underwater from the tech. wreck in 2000 or the S@P 500 Index holders who just now broke even after seven long years.
Dynamic allocation and clear stop loss points will allow you to control your risk because one day this market will turn, and with the global village of Internet investors with their fingers on the “Enter” key, the turn will be swift and painful.
Deploy a proven trading plan and be willing to stick with it:
Readers of this report know that we don’t believe in “buy and hold” and that it’s possible to outperform the market by investing in sectors that show stronger relative strength and sentiment than the broader market. The key thing for us as investors is to find a trading plan we’re comfortable with and then stick with it long enough for it to work. Human emotions are the biggest cause of investing failure and account for the fact that the average retail investor averages 3% returns per year compared to 8% for the broad markets. Put your emotions away and go with your plan, and you’ll be far more successful in the long run.
Next week promises to be more stable than the last two have been as the market adjusts to the news on interest rates and the “fog of war” clears. Our positions are intact and we’ll continue holding them but with tight stops to control our downside risk.
Have a great weekend.
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
Hi, Friends,
Nobody can deny that the last two weeks have been some kind of roller coaster ride in the “shock market,” the equity and bond markets of the world.
Last week’s plunge followed by this week’s rise proved to be a whiplash maker for all participants. And in the Internet age, these roller coaster rides are becoming more prevalent and ever more exciting. In February, we had the sell off caused by the drop in the Chinese market, and last week was the interest rate debacle in the bond market followed by this week’s recovery.
As investors, it becomes more important than ever to have a game plan for riding these waves that seem to be coming at us every four months or so. As I see it, here are the 3 keys to “shock market” success:
Don’t believe anything you read or hear in the financial press:
To me, the financial press should be taken as strictly entertainment. Here are a few quotes I read last week:
“Investors are throwing in the towel,” said Robert Auwaerter, head of fixed income investments at Vanguard.
“Such is the classic end to a bull market,” says Claran O’Hagen, head of strategy at SG Fixed Income.
“I expect 6.95 interest rates by year end due to more persistent inflationary pressures,” says Mervyn Kind, Governor of the Bank of England.
And here are a couple of quotes from this week:
"People are happy that core inflation came in better than expected," said Peter Cardillo, chief market economist at Avalon Partners. "It seems that the hike in food and energy prices was offset by the deterioration in the housing market."
"Core inflation is falling fast," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics
“Off to the races for the bulls! Wall Street records could fall Friday as traders cheer inflation gauge.” Marketwatch.com
So, what has changed since last week? Anyone making investment decisions based on what they read in the financial press is headed for disaster.
Have a clear understanding of your risk:
In markets like these, risk control is paramount. You need to understand what you have at risk and if you can sleep at night with that amount on the line. Also, a “buy and hold” approach will not let you control risk. Just ask the investors in the NASDAQ who are still underwater from the tech. wreck in 2000 or the S@P 500 Index holders who just now broke even after seven long years.
Dynamic allocation and clear stop loss points will allow you to control your risk because one day this market will turn, and with the global village of Internet investors with their fingers on the “Enter” key, the turn will be swift and painful.
Deploy a proven trading plan and be willing to stick with it:
Readers of this report know that we don’t believe in “buy and hold” and that it’s possible to outperform the market by investing in sectors that show stronger relative strength and sentiment than the broader market. The key thing for us as investors is to find a trading plan we’re comfortable with and then stick with it long enough for it to work. Human emotions are the biggest cause of investing failure and account for the fact that the average retail investor averages 3% returns per year compared to 8% for the broad markets. Put your emotions away and go with your plan, and you’ll be far more successful in the long run.
Next week promises to be more stable than the last two have been as the market adjusts to the news on interest rates and the “fog of war” clears. Our positions are intact and we’ll continue holding them but with tight stops to control our downside risk.
Have a great weekend.
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
Sunday, June 10, 2007
What an ugly week it was !
Hi, Friends,
Last weekend in this report, I said, "it's obvious that there isn't a rate cut in sight, but rather, it's a likely possibility that 10 Year interest rates will go above 5% soon, possibly as soon as next week," and, "in a nutshell, we'll continue "following the money," but being careful with our positions because a falling dollar and rising rates cannot be good for U.S. stocks in the long run."
Maybe I should stop saying things like that because, sure enough, rates went up and stocks went down this week, with a vengeance!
Treasury yields popped above 5%, the highest since last August, and oil prices rose into the mid-sixties. To top things off, "Backstage Ben" Bernanke, the U.S. Fed Chief, made a center stage appearance in South Africa on Tuesday and said that risks to moderating inflation "remain to the upside" and that "demand is high relative to capacity."
Mixed together, these negative elements were enough to send the Dow down more than 400 points in 3 days. For the month so far, the Dow is down 1.8%, the S@P 1.9%, and the NASDAQ, 1.5%
At Wall Street Sector Selector, we were stopped out of one position, a new trade that was closed at our 5% money management stop loss. I hate it when that happens, but our other positions held on OK and this is where our inherent diversification and money management discipline pays off.
Overall, we locked in 3% gains for May and are up 6.25% year to date, including this week's downdraft, and maintain our average of 85% of all trades making money.
What's ahead? More volatility until the market absorbs the changing interest rate environment. A continuing shift to gold, oil and natural resources as inflation becomes more of a player on the global scene, falling bond prices and a continued drop in the U.S. Dollar.
All of these shifting trends will present us with profit making opportunities in the months ahead as they become more clear and well established.
Also, remember that the 6 worst months of the year are May through October, with the Dow losing more than 500 points during those months compared to gaining more than 11,000 over the other six months of the year when looking back to 1950. When you factor in this eveseasonal "June Gloom," I don't feel bad about lightening up on equity exposure, and personally don't plan to add new money to the market until autumn's chill fills the mountain air in Bend.
So, take a deep breath and enjoy the rest of your weekend. I was home for a short Friday and Saturday after a long week in Japan and Taipei. It was just enough time to see my #2 son play in a Celtic fiddle performance at the old Tower Theatre in Bend, have a latte or two with my wife, pick up some clean clothes and catch up on a little jet lag. Sunday evening takes me to London where I plan to get a feel for the changing interest rate climate in Europe.
Till next week.
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://www.wallstreetsectorselector.com
Last weekend in this report, I said, "it's obvious that there isn't a rate cut in sight, but rather, it's a likely possibility that 10 Year interest rates will go above 5% soon, possibly as soon as next week," and, "in a nutshell, we'll continue "following the money," but being careful with our positions because a falling dollar and rising rates cannot be good for U.S. stocks in the long run."
Maybe I should stop saying things like that because, sure enough, rates went up and stocks went down this week, with a vengeance!
Treasury yields popped above 5%, the highest since last August, and oil prices rose into the mid-sixties. To top things off, "Backstage Ben" Bernanke, the U.S. Fed Chief, made a center stage appearance in South Africa on Tuesday and said that risks to moderating inflation "remain to the upside" and that "demand is high relative to capacity."
Mixed together, these negative elements were enough to send the Dow down more than 400 points in 3 days. For the month so far, the Dow is down 1.8%, the S@P 1.9%, and the NASDAQ, 1.5%
At Wall Street Sector Selector, we were stopped out of one position, a new trade that was closed at our 5% money management stop loss. I hate it when that happens, but our other positions held on OK and this is where our inherent diversification and money management discipline pays off.
Overall, we locked in 3% gains for May and are up 6.25% year to date, including this week's downdraft, and maintain our average of 85% of all trades making money.
What's ahead? More volatility until the market absorbs the changing interest rate environment. A continuing shift to gold, oil and natural resources as inflation becomes more of a player on the global scene, falling bond prices and a continued drop in the U.S. Dollar.
All of these shifting trends will present us with profit making opportunities in the months ahead as they become more clear and well established.
Also, remember that the 6 worst months of the year are May through October, with the Dow losing more than 500 points during those months compared to gaining more than 11,000 over the other six months of the year when looking back to 1950. When you factor in this eveseasonal "June Gloom," I don't feel bad about lightening up on equity exposure, and personally don't plan to add new money to the market until autumn's chill fills the mountain air in Bend.
So, take a deep breath and enjoy the rest of your weekend. I was home for a short Friday and Saturday after a long week in Japan and Taipei. It was just enough time to see my #2 son play in a Celtic fiddle performance at the old Tower Theatre in Bend, have a latte or two with my wife, pick up some clean clothes and catch up on a little jet lag. Sunday evening takes me to London where I plan to get a feel for the changing interest rate climate in Europe.
Till next week.
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
http://www.wallstreetsectorselector.com
Sunday, June 3, 2007
When a Record is Nothing to Cheer About
Hi, Friends,
This was a busy week, both in the markets and for me personally. The week took me to London where I experienced first hand the pain of a weak dollar; we wrapped up a strong May for Wall Street Sector Selector and rebalanced the portfolio for June which got off to a strong start on Friday. Also, it was a huge week in the markets for reports and records.
Why I’m not cheering record closes on the S@P 500
This week saw the S@P 500 make not one, but three record closes, along with new highs for the Dow. Predictably, the records were met with great hoopla in the financial press, but I’m not cheering because what nobody mentioned too prominently was that the last record close in the S@P 500 was set on March 24, 2007!
What this means is that “buy and hold’ investors have just lost seven years of investment gains, finally managing to break even this week. More accurately, what this means is that investors have actually lost somewhere between 14%-21% due to inflation and lost purchasing power during those years.
To me, this is not a recipe for investment success or a great way to grow your net worth, and so I’m very happy to be involved in Wall Street Sector Selector and be able to offer a pleasant alternative to just “following the market.”
But, it was a good week, sort of
because the S@P and Dow did, indeed, reach new records, the employment report came in at 157,000 new jobs versus a forecast of 150,000, the Institute for Supply Management Index rose to 55% versus an expected decline, and the inflation numbers showed a year over year gain of 2% which is within the Fed’s “comfort zone,” the first time that has happened in 14 months.
But it wasn’t a good week for the University of Michigan Consumer Confidence Index which was down, or for the April pending home sales which were down 3.2% along with the first fall in housing prices since 1991. It also wasn’t a good week if you work for Dell Computer which is going to cut 10% of their workforce, or 8,800 jobs, or if you work in the manufacturing sector that lost 19,000 jobs, half of those in automotives.
So, the good jobs report came with more than 176,000 service jobs being added as we continue our shift from being a manufacturing economy to a Starbuck’s economy.
Sadly, this shift is starkly reflected in the fact that our personal savings rate for May was a negative 1.3%, the 25th consecutive month that Americans spent more than their take home pay.
In my view, this is not a sustainable path and as the old saying goes, “something’s gotta give.”
Also, this week the Fed released the minutes of their May 9th meeting in which they said that “inflation is the predominant concern,” and given the strong jobs reports, I think it’s obvious that there isn’t a rate cut in sight, but rather, it’s a likely possibility that 10 Year interest rates will go above 5% soon, possibly as soon as next week. This will be bad news for housing, adjustable rate interest mortgage holders, and all of the consumers who are maxing out their credit cards.
Also, the dollar bounced off record April lows against the Euro and a 26 year low against the British Pound, but I’m not optimistic that this recent turn around is the start of a trend in the right direction.
In London this week, I got 1 British Pound for approximately $2.00 U.S., and believe me, that makes prices over there really scary. I can remember not so many years ago when the ratio was exactly opposite and I could get 2 Pounds for my mighty greenback.
This is a subject all its own and one we can delve into next week, because a weak dollar has much greater implications than $300 theatre tickets in London.
In a nutshell, we’ll continue “following the money,” but being careful with our positions because a falling dollar and rising rates cannot be good for U.S. stocks in the long run.
But that’s the beauty of having a well thought out, disciplined trading plan. Whatever happens, there’s always a bull market somewhere, and I’m confident Wall Street Sector Selector will identify the next bull and allow us to profit from it.
This weekend is recovery time for us. A couple of home videos and takeout pizza.
I mentioned last week that we were in Carson City for a swim meet over Memorial Day Weekend. On the way to that meet, a Dad and his three sons were killed in a head on collision with a semi-truck, and on Sunday, we observed a moment of silence for that family at the start of the meet.
When the boys’ races came up, their lanes were left open with a bouquet of flowers on their blocks and their names glowed in the lights on the timing board with the seconds ticking away. This is an unspeakable tragedy, of course, and as we discuss record closes, higher interest rates and a weak dollar, it’s key to keep our family and friends at the forefront of our attention and live each day to the fullest.
Till next week.
Your partner in prosperity,
John Nyaradi
Publisher
wall-street-sector-selector.com
This was a busy week, both in the markets and for me personally. The week took me to London where I experienced first hand the pain of a weak dollar; we wrapped up a strong May for Wall Street Sector Selector and rebalanced the portfolio for June which got off to a strong start on Friday. Also, it was a huge week in the markets for reports and records.
Why I’m not cheering record closes on the S@P 500
This week saw the S@P 500 make not one, but three record closes, along with new highs for the Dow. Predictably, the records were met with great hoopla in the financial press, but I’m not cheering because what nobody mentioned too prominently was that the last record close in the S@P 500 was set on March 24, 2007!
What this means is that “buy and hold’ investors have just lost seven years of investment gains, finally managing to break even this week. More accurately, what this means is that investors have actually lost somewhere between 14%-21% due to inflation and lost purchasing power during those years.
To me, this is not a recipe for investment success or a great way to grow your net worth, and so I’m very happy to be involved in Wall Street Sector Selector and be able to offer a pleasant alternative to just “following the market.”
But, it was a good week, sort of
because the S@P and Dow did, indeed, reach new records, the employment report came in at 157,000 new jobs versus a forecast of 150,000, the Institute for Supply Management Index rose to 55% versus an expected decline, and the inflation numbers showed a year over year gain of 2% which is within the Fed’s “comfort zone,” the first time that has happened in 14 months.
But it wasn’t a good week for the University of Michigan Consumer Confidence Index which was down, or for the April pending home sales which were down 3.2% along with the first fall in housing prices since 1991. It also wasn’t a good week if you work for Dell Computer which is going to cut 10% of their workforce, or 8,800 jobs, or if you work in the manufacturing sector that lost 19,000 jobs, half of those in automotives.
So, the good jobs report came with more than 176,000 service jobs being added as we continue our shift from being a manufacturing economy to a Starbuck’s economy.
Sadly, this shift is starkly reflected in the fact that our personal savings rate for May was a negative 1.3%, the 25th consecutive month that Americans spent more than their take home pay.
In my view, this is not a sustainable path and as the old saying goes, “something’s gotta give.”
Also, this week the Fed released the minutes of their May 9th meeting in which they said that “inflation is the predominant concern,” and given the strong jobs reports, I think it’s obvious that there isn’t a rate cut in sight, but rather, it’s a likely possibility that 10 Year interest rates will go above 5% soon, possibly as soon as next week. This will be bad news for housing, adjustable rate interest mortgage holders, and all of the consumers who are maxing out their credit cards.
Also, the dollar bounced off record April lows against the Euro and a 26 year low against the British Pound, but I’m not optimistic that this recent turn around is the start of a trend in the right direction.
In London this week, I got 1 British Pound for approximately $2.00 U.S., and believe me, that makes prices over there really scary. I can remember not so many years ago when the ratio was exactly opposite and I could get 2 Pounds for my mighty greenback.
This is a subject all its own and one we can delve into next week, because a weak dollar has much greater implications than $300 theatre tickets in London.
In a nutshell, we’ll continue “following the money,” but being careful with our positions because a falling dollar and rising rates cannot be good for U.S. stocks in the long run.
But that’s the beauty of having a well thought out, disciplined trading plan. Whatever happens, there’s always a bull market somewhere, and I’m confident Wall Street Sector Selector will identify the next bull and allow us to profit from it.
This weekend is recovery time for us. A couple of home videos and takeout pizza.
I mentioned last week that we were in Carson City for a swim meet over Memorial Day Weekend. On the way to that meet, a Dad and his three sons were killed in a head on collision with a semi-truck, and on Sunday, we observed a moment of silence for that family at the start of the meet.
When the boys’ races came up, their lanes were left open with a bouquet of flowers on their blocks and their names glowed in the lights on the timing board with the seconds ticking away. This is an unspeakable tragedy, of course, and as we discuss record closes, higher interest rates and a weak dollar, it’s key to keep our family and friends at the forefront of our attention and live each day to the fullest.
Till next week.
Your partner in prosperity,
John Nyaradi
Publisher
wall-street-sector-selector.com
Sunday, May 27, 2007
Annoying Alan and what's that great sucking sound?
Hi, Friends,
This week the world’s markets were roiled again by Alan Greenspan, “Annoying Alan,” who said in a speech that China was heading for a “dramatic correction.” Of course, he’s right, and I chuckled that last week’s Sector Selector Review had discussed China over the weekend and came to the same conclusion. Maybe Alan’s reading our newsletter.
In all seriousness, though, I’m happy that Alan can make millions on the lecture circuit, but think it would be prudent for him to understand that he can move markets and that perhaps some of the mumbling and arcane comments he was famous for as Fed Chief would also be appropriate in his new role as “Former Fed Chief.”
Maybe “Backstage Ben,” Ben Bernanke, the Current Fed Chief, needs to have a talk with “Annoying Alan” and remind him who’s really in charge.
But China and the foreign markets are symptomatic of the “great sucking sound” that’s going on in world capital markets today. Some years ago, Ross Perot made a run for President and in discussing NAFTA, the North American Free Trade Agreement, said that it would create a “great sucking sound” as jobs left America for foreign shores. And clearly, that has happened, and clearly, that is at least partially responsible for today’s “great sucking sound,” the unprecedented outflow of capital from U.S. capital markets.
In March, 2007, alone, U.S. investors bought $40.3 Billion more of foreign stocks and bonds than they sold, second only to December’s $48.7 Billion. The Investment Company of America reports that Americans bought a total of $160 Billion worth of stock funds last year and that a whopping 93% of those assets went to foreign stocks and mutual funds.
This outflow of capital weakens the dollar which boosts returns on foreign investments, and that leads to more investor enthusiasm and more money chasing these offshore opportunities. And this, of course, helps to explain why, over the last three years, the Dow Jones World Index is up 68% while the U.S. Dow Jones Index is up only 19%.
It’s no secret that international funds have been the place to be the last few years, and I’m happy to report that we have profited handsomely from this powerful trend. That trend seems to be still firmly in place, although short term weakness has clearly entered the market this week with Annoying Alan’s comments. It’s also no secret that one day China’s bubble will explode and that many American investors will get splattered in the explosion. Can anyone say “tech wreck?”
For us as sector investors, we will continue to follow the money, even if it doesn’t make sense from any point of view except for the power of mob psychology. The crowd is right until they’re wrong, and so we’ll be careful not to get overexposed to any one sector, no matter how attractive it may be. And when the worm turns, we’ll plan to be well on our way to other markets long before the rout makes headlines on CNBC.
This weekend, of course, is Memorial Day, and for us, as Americans, it’s a moment to honor our war veterans and fallen U.S. soldiers. Particularly this year, as the war in Iraq continues, it’s more important than ever for us to take a moment from our family gatherings and barbeques and peaceful days by the lake or ocean to honor our U.S. servicemen.
We’re in Carson City, Nevada, for a swim meet this weekend. We’re planning side trips up to Lake Tahoe and Virginia City with our young son, and our oldest is in California at a Speedo Grand Challenge Swim Meet competing against the national teams from Britain and several other countries.
Wherever your holiday weekend takes you, I wish you good memories and safe and happy times.
Till next week,
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
www.wall-street-sector-selector.com
This week the world’s markets were roiled again by Alan Greenspan, “Annoying Alan,” who said in a speech that China was heading for a “dramatic correction.” Of course, he’s right, and I chuckled that last week’s Sector Selector Review had discussed China over the weekend and came to the same conclusion. Maybe Alan’s reading our newsletter.
In all seriousness, though, I’m happy that Alan can make millions on the lecture circuit, but think it would be prudent for him to understand that he can move markets and that perhaps some of the mumbling and arcane comments he was famous for as Fed Chief would also be appropriate in his new role as “Former Fed Chief.”
Maybe “Backstage Ben,” Ben Bernanke, the Current Fed Chief, needs to have a talk with “Annoying Alan” and remind him who’s really in charge.
But China and the foreign markets are symptomatic of the “great sucking sound” that’s going on in world capital markets today. Some years ago, Ross Perot made a run for President and in discussing NAFTA, the North American Free Trade Agreement, said that it would create a “great sucking sound” as jobs left America for foreign shores. And clearly, that has happened, and clearly, that is at least partially responsible for today’s “great sucking sound,” the unprecedented outflow of capital from U.S. capital markets.
In March, 2007, alone, U.S. investors bought $40.3 Billion more of foreign stocks and bonds than they sold, second only to December’s $48.7 Billion. The Investment Company of America reports that Americans bought a total of $160 Billion worth of stock funds last year and that a whopping 93% of those assets went to foreign stocks and mutual funds.
This outflow of capital weakens the dollar which boosts returns on foreign investments, and that leads to more investor enthusiasm and more money chasing these offshore opportunities. And this, of course, helps to explain why, over the last three years, the Dow Jones World Index is up 68% while the U.S. Dow Jones Index is up only 19%.
It’s no secret that international funds have been the place to be the last few years, and I’m happy to report that we have profited handsomely from this powerful trend. That trend seems to be still firmly in place, although short term weakness has clearly entered the market this week with Annoying Alan’s comments. It’s also no secret that one day China’s bubble will explode and that many American investors will get splattered in the explosion. Can anyone say “tech wreck?”
For us as sector investors, we will continue to follow the money, even if it doesn’t make sense from any point of view except for the power of mob psychology. The crowd is right until they’re wrong, and so we’ll be careful not to get overexposed to any one sector, no matter how attractive it may be. And when the worm turns, we’ll plan to be well on our way to other markets long before the rout makes headlines on CNBC.
This weekend, of course, is Memorial Day, and for us, as Americans, it’s a moment to honor our war veterans and fallen U.S. soldiers. Particularly this year, as the war in Iraq continues, it’s more important than ever for us to take a moment from our family gatherings and barbeques and peaceful days by the lake or ocean to honor our U.S. servicemen.
We’re in Carson City, Nevada, for a swim meet this weekend. We’re planning side trips up to Lake Tahoe and Virginia City with our young son, and our oldest is in California at a Speedo Grand Challenge Swim Meet competing against the national teams from Britain and several other countries.
Wherever your holiday weekend takes you, I wish you good memories and safe and happy times.
Till next week,
Your partner in prosperity,
John Nyaradi
Publisher
Wall Street Sector Selector
www.wall-street-sector-selector.com
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