Hey Folks --- Sorry about not participating on the board lately, but since I stopped publishing The Sector Fund Strategist at the end of July, I have been concentrating on my managed accounts and have not been on the web much at all. I just did a review of the past month's postings, however, and I would like to add a few comments at this time.
First, I think that it is important to understand that the basic nature of the stock market has changed dramatically during the past year. Trends are far more short lived and fickle than in the past, and short term trading, as opposed to longer term investing, has, at the urging of the networks and with the constant urging of the on line services, has become the name of the game. This has had a significant effect on the way that a sector fund investor needs to view the ongoing shifts in momentum and sector favoritism, since with few exceptions, getting a week or two of outperformance out of a sector has become a rare commodity.
Because of this, the time frame used for determining entry points into the Selects must be shortened considerably to correspond to the prevailing investment philosophy being employed in the marketplace. Looking at performance over 2-4 weeks, a period that used to provide us with helpful guidance in our selections, has been rendered almost useless at this point. In addition, any hesitation in buying a fund that has generated a Buy signal, even one or two days in many cases, will often be detrimental to one's returns. Pulling the trigger quickly, in response to short term momentum shifts, is now a requirement for success, while the fundamental analysis of the longer term prospects for a particular sector is now far less important given the investing environment that is in place.
Based on many of the recent postings, it seems that the investors on this board spend a great deal of time in viewing the profit potential for a sector based on fundamental economic and fiscal changes. To wit, Health Care should be good in a recessionary environment, or Utilities should do well if interest rates remain low. I can't be sure, of course, but it appears that far less time is being spent closely tracking momentum shifts within the Select Fund family, as well as employing technical charts and indicators to determine entry points and the most appropriate funds to be invested in. This is not meant to be a criticism, of course, since it appears that many of the techniques used are providing solid profits for most investors who provide that kind of information. One has to use whatever technique brings the most comfort and profit, of course, but under current conditions, which I happen to believe will not be changing anytime soon, shorter term analysis and speed of investment decisions appears to be necessary to succeed under the modus operandi being employed by the traders of Wall Street.
In either case, the system that I use has been generating extremely early, and in most cases, very profitable Buy signals and gains to date. For your reference, the following is a listing of the Select Funds, the date of their last Buy signal, and their approximate gain to date (computed from the closing price on the day that they generated a Buy, even though the purchase would have been made at the 10 A.M. price the next morning).
Air Transportation: 10/12 -- + 17.0%
Automotive: 10/12 -- + 10.6%
Biotechnology: 10/9 -- + 8.0%
Brokerage: 10/9 -- + 16.7%
Bus. Svcs.: 10/12 -- + 13.7%
Chemicals: 10/16: - .9%
Computers: 10/9 -- + 13.3%
Construction: 10/12 -- 14.4%
Consumer Ind: 10/14 -- + 7.8%
Cyclical Ind.: 10/9: + 10.6%
Defense: 10/19 -- + 3.0%
Devel. Comm.: 10/9 -- + 13.6%
Electronics: 10/9 -- + 21.8%
Energy Services: 10/15 -- + 15.3%
Environment: 10/20 -- + 3.0%
Financial Svcs.: 10/9 -- + 12.7%
Food & Ag.: 10/8 -- + 4.6%
Home Finance: 10/9 -- + 16.7%
Ind. Equip.: 10/9 -- + 12.5%
Ind. Mater.: 10/9 -- + 5.3%
Insurance: 10/12 -- + 11.4%
Leisure: 10/14 -- + 9.6%
Med. Systems: 10/13 -- + 6.3%
Med. Delivery: 10/12 -- + 3.6% (Sell Signal generated this past Friday)
Multimedia: 10/15 -- + 5.9%
Paper & Forest: 10/9 -- + 5.8%
Regional Banks: 10/9 -- + 9.0%
Retailing: 10/12 -- + 8.9%
Software: 10/9 -- + 8.3%
Technology: 10/9 -- + 14.8%
Telecomm.: 10/12 -- + 10.7%
Transportation: 10/14 -- + 11.9%
Utilities: 10/14 -- + 4.0%
Also:
S & P 500: 10/9 -- + 8.8%
Nasdaq 100: 10/9 -- + 11.9%
For these signals, investors should buy Rydex OTC and Rydex Nova
All funds not listed are currently rated as Sells.
The current fund rankings (as of 10/23) are as follows:
Electronics
Technology
Biotechnology
Air Transportation
Energy Services
Computers
Bus. Svcs.
Environment
Defense
Out of the 33 Select Fund Buy Signals that were generated during the past few weeks, 32 have produced positive returns to date, and 25 have produced returns to date that are currently greater than what the S & P 500 has done since the date of the buy signals. Admittedly, the past few weeks have produced greater than normal returns for many of the Selects, but the short term momentum system I am currently using has still produced an extremely high percentage of winning positions and a high percentage that are beating the market. As far as this week goes, the strongest near term momentum is being produced by Electronics, Biotechnology, and Defense, while the financials need to be watched for additional weakness.
Happy investing.
Uncle Bernie |
