To Dennis, Victor, et al ....
There seems to be a bit of confusion regarding the signals in the latest issue of my newsletter, The Sector Fund Strategist. First of all, over the past three weeks, a number of positions that were first established between mid-April and early May were closed out, with substantial profits in virtually every case. The sales were recommended due to my continuing review of the ongoing technical deterioration of these funds, as well as their reaching specific draw down limits from their maximum gains, which warranted the locking in of profits to date. As an example, Energy Services, whose last buy signal was on 5/9/97, was sold with a net gain of approximately 55% last week. The high tech funds, as a group, were issued Buy Signals in the middle of June, and were liquidated during the week of 10/20 to 10/24 at various times. These sales resulted in gains of between 13 and 23 percent for the holding periods.
Long before last Saturday's issue, all the Selects had fallen into Sell territory, and I am watching the renewed progress of all the sectors for new buy signals. As was explained in extensive detail in this week's issue, the recent declines of many funds have left their jagged price charts in areas where definitive support and resistance levels either did not exist, or were extremely hard to verify from a chartists standpoint. Until yesterday's strong upward move (and one can very well question whether a technical bounce in Hong Kong was enough of a reason for a sudden 3% rise in the Dow) there was nothing of substance in the charts to justify any new buy signals. Guessing that the market would continue higher, and investing in any fund during the day on Monday, has no basis from a technical standpoint, and is certainly not a reason for jumping back into the market that can be justified or defined as more than a lucky guess at this point in time.
However, after today's (Tuesday's ) action, a number of funds have advanced past certain points, and the Hotline Message that will be issued tomorrow morning will point out these New Buy signals. Nevertheless, as you have probably heard ad nauseum on the financial networks, the probability for a subsequent retesting of last week's lows is, from a technical standpoint, desireable, if not altogether essential, in order for the price charts of these funds to develop a true bottom and the accompanying technical divergences that would make the sustainability of their next rally upward a far more probable occurence.
Even in the case of the new buy signals, keep in mind that the market remains on relatively unsteady footing at this time. This warrants tiptoeing back in by investing in the strongest sectors, as opposed to a major committment of funds that one could do with more confidence if far better technical confirmations existed.
According to your message, your interpretation of my Sell ratings seems to assume that I was issuing, for the first time, Sell signals for all of the Select Funds in last weekend's issue. As I explained above, this is simply not the case. In fact, the last sell signal, for those few funds that I still believed should be held as of the previous week's issue (dated 10/24), were given out after the market's downturn on 10/27. Since then, the market is being tracked carefully for new buying opportunities.
I am not sure if you have received a sample issue, but if you would like one please contact me by e-mail, or call me at anytime at 516-437-2727. Obviously, I hope that this sharp rebound after a steep correction continues, but I believe that caution and selectivity are defintiely called for at this time. Hope to hear from you soon.
Best regards,
Bernie Kaplan
Editor & Publisher
The Sector Fund Strategist |
