Friday, August 30, 2013

Indices closed down .21% to .84%......

Indices closed down on Syrian uncertainty.

S&P 500 @ 1632.97, low 1628.05, August low 1627.47

RSI @ 37.37

CMF @ -0.150

Internals were :

Down volume led by 2.65 to 1 in NYSE & 4.92 to 1 in Nasdaq

Declining stocks led by 2.45 to 1 in NYSE & 3.25 to 1 in Nasdaq

Net new 52 wk lows were leading by 29 in NYSE & highs were leading by 6 in Nasdaq

VIX UP 1.19% @ 17.01

Oil @ $107.65

Gold @ $1396.10

Canadian $ @ 94.47

Portfolio weighting :

AUY 25.33%

ANR 16.47%

KOG 16.34%

BAC 15.15%

MU 13.83%

CLF 12.88%

Exposure 162%

Stocks which closed green included CSOD SPLK FB KORS X
TIF TSLA POT JCP JKS RDN CSIQ CMG COH MOS
WPRT BRCM ECA Z MLNX......

Next post by 2 PM Sunday.

BLOG does NOT give buy or sell.

Saleem

4 comments:

charlie Fallon said...

hi saleem , Curious as to what piqued your interest and eventual buy of MU? thanks charlie

Stocks100 said...

Hi Charlie,

MU is having "major resurgence in Sales & EPS in next 12 months"

Sales going from +8.10% to +55.90%

EPS going from loss of 27 cents to profit of $1.80.....all ending FY August 2014.....

Saleem

stocktrader_1996 said...

Hey Saleem,

Despite another week of changing directions, missed opportunities, and some poor speculation, the portfolio only ended down 0.61% versus the S&P's -1.84%.

Winners: TZA (+3.9% upon sale) SPLK (+3.8% from purchase) CLF (+2.5% upon sale) KORS (+2.1%)

Losers: PSUN (-14.4% from purchase) CLDX (-7.9%) HLF (-5.2%) FCX (-4.9%) X (-4.1%)

I sold into early strength on Monday letting go of CLF, TCK, KALU, and Z. This mostly worked in my favor as only Z traded higher after. Tuesday was the big selloff and the oversize TZA position helped tremendously. I also sold INVN that day to reduce long exposure even more. After taking a couple days to evaluate the situation, I really turned more bullish on Thursday and sold the entire TZA hedge and increased long exposure by adding LCC, TRLA, LRCX, PSUN, and a lot more FB. I also sold OMED due to poor performance. Finally on Friday, I deployed even more cash by adding to my "Big 3" names CSOD and KORS, and picked up SPLK after earnings and MU for more long exposure. Here's the portfolio allocation now:

"Big 3": FB (13.1%) CSOD (11.4%) KORS (8.9%)
Others: FCX SPLK CLDX YHOO LCC MU LRCX X TRLA HLF RALY PSUN (5.3%->3.9%)
Cash: 9%

There were many reasons I changed my stance on the markets late this week. Obviously, the pullback helped make stocks cheaper, but other indicators like sentiment, relative strength of certain stocks, and certain economic data and reaction all added to my change in thinking.

The negative sentiment was a big factor. Besides the Investor's Intelligence survey coming out with the lowest bullish % (38.1) since November 2012, almost every portfolio manager/trader that came on TV said they had raised cash recently. They all cited expectations of a weak September due a variety of reasons like seasonal patterns, political debate in US, uncertainty around Syria, Fed taper concerns and/or elections in Germany. With this many people expecting the worst and truly deployable cash on the sidelines, I think that sets up a positive tailwind for the market and especially outperforming stocks.

All during the decline of recent weeks, many of the high growth/beta stocks continued to perform very well. I've been sitting and watching and waiting for these stocks to roll over, but they just haven't. I find the performance of diverse but growth-oriented stocks like FB, TSLA, NFLX, Z, LNKD, and GMCR a very compelling reason to suggest there is underlying market strength and a desire to accumulate for the future.

Finally, I think the economic data and reaction is interesting. We have seen some dismal housing and consumer related data in recent weeks. With economic data that poor, one might have expected more and sooner selloff (really it was Syria fears that finally "broke" the market). Add the muted reaction to this data which suggests it is a temporary pause, to the generally better indications from employment and manufacturing, and definitely an inflection point in Europe's growth trajectory, and stabilization in China's economy, and we really have a picture that tells us the future is brighter than the past.

Taking a step back and really looking at all the indicators, I feel like the risk/reward is favorable here, especially if one is in the right stocks. Besides the three factors I discussed above, I think the negative market reaction to Syria and the Fed taper is played out, unless something dramatically unexpected happens. In this light, I plan to stay the course unless one of the three pillars breaks (sentiment, growth stocks, economic data and reaction). Obviously, unexpected circumstances surrounding Syria or the Fed could happen, but these are impossible to predict in advance, and once you can actually act, often you'll want to go counter-trend anyways. I have cash available for ~two more stocks and hope to find good candidates soon.

Hope all had a great weekend! :)

Stocktrader

Stocks100 said...

Hi Stocktrader,

Nice summary about market forces & your logical approach to buy & sell.

Saleem