An Uncertain Bull Market

 This is an unbelievably good market one may say, as of May 16, the S&P 500 is up 3.3% for the month and over 15.7% for the year. Just look at the numbers, the S&P 500 had six consecutive positive months and only four negative months for the past nineteen months going back to October 2011. If we continue at this rate the S&P 500 might be touching 2,000 mark …

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Category: Sector Rotation

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This Low Volatility is Dangerous for the Markets

I was invited to speak at a conference recently. As I was presenting my ideas about generating alpha, some folks were nodding their heads gently in approval, some were doing their BlackBerry prayer, and some were simply “not present”. Typically that’s how it would end: some exchange of ideas, a nice conversation, but no more. But I had more to say. I started talking about volatility and how it effects …

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Category: VIX

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Don’t get burned by Energy

This year was not kind to investors investing in the energy sector. The sector is the worst performing sector year to date, as measured by the Energy Select Sector SPDR (XLE) from State Street, with negative 7.43% for the year and severely underperforming the S&P 500 ETF (“SPY”) by 14.79%. Sector Ticker YTD Return YTD over SPY Technology XLK 12.70% 5.34% Discretionary XLY 11.74% 4.38% Financials XLF 11.12% 3.76% Healthcare …

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Category: XLE

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What the Fear Gauge Says

The volatility index, climbing until Greece’s vote Sunday  favoring the pro-austerity party, is back down. Popularly known as the fear  index, it roughly measures investors’ anxieties. When it climbs, it’s a bearish  signal. But look for the index to rise again. The troubles in Greece – and Europe – are far from over. Europe  will go through what we went through after 2008. The U.S. economy is still not  healthy, …

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Category: VIX

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Playing Stock Market Defense

Not pretty, is how one would probably describe the markets for the past two months. So the best idea is to stay defensive, meaning utilities, consumer staples and healthcare. This past week’s rally has restored some of the losses, but lots of fears remain. In April, the Standard & Poor’s 500 stock index was down 0.75%, and in May the market slid 6.27%. The uptick that began Tuesday lifted the …

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Beat the Market With Sector Rotation

Everyone wants to outpace the market, usually defined as the  Standard & Poor’s 500 index. While the stock market never guarantees you a  sure-fire win, there’s a clever approach that has triumphed in the last dozen  years. It involves rotating into the best-performing sectors annually. Last month, I wrote about this interesting investment strategy, which a pioneer of sector investing, Standard & Poor’s Sam Stovall, calls: “There’s Always a Bull …

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Category: Sector Rotation, SPY, XLB, XLE, XLF, XLI, XLK, XLP, XLU, XLV, XLY

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How to Short the Market

Nice couple of days we are having so far. The S&P 500 is up with help from the tech sector due to Apple’s (AAPL) positive earnings surprise, helping to lift the SPDR Technology Select Sector (XLK) with it. So is this an upswing? Are we past the April blues? Based on our Sector Scoring and Allocation Methodology (SectorSAM) our view is that we are in a mildly positive upswing (see …

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Four ETF Rules to Live By

In general ETFs are excellent investment vehicles. They are liquid and transparent, for one thing — you can always see what they hold, unlike the mutual funds. They also trade in real time, like stocks, and typically have lower management fees. ETF are just better technology than mutual funds. It is no wonder that ETFs are rapidly replacing mutual funds as investment vehicle of choice. But, in meeting with a …

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Not Time to Panic

After a beautiful first quarter, which brought the S&P 500 a wonderful 12% return, things turned drastically downward. So far this month, the S&P 500 is down 2.82%. What is going on? Are we in for continued downward spiral or is this a correction? If you look at the first-quarter numbers, they all reflect rebound in economy and show growth. The top performing sectors showed continued stabilization of the financial …

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There’s Always a Bull Market Somewhere

“Taking a buy-and-hold approach with sectors is like buying a Ferrari and then driving behind a school bus the rest of your life,” so begins Chapter 5 of Sam Stovall’s book, The Seven Rules of Wall Street. Without a doubt, if I had a Ferrari I would not want to drive behind a school bus ever. So, clearly I was intrigued by this. Here’s a bit of background about Sam …

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Category: Sector Rotation, XLB, XLE, XLF, XLI, XLK, XLP, XLU, XLV, XLY

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