Tuesday, January 03, 2012

The Morning Call, Tuesday Morning Chartology + Year end performanc numbers



The Market
Technical
Tuesday Morning Chartology


The S&P closed Friday below the neckline of the reverse head and shoulders and slightly below its 200 day moving average (wiggly red line). This suggests a negative trend; but I wouldn’t bet money until there is some clear follow through.





GLD penetrated its 300 day moving average then recovered--a good sign; however, it couldn’t regain the 153 initial support level--a not so good sign. However, under our time and distance discipline, it has two more trading days to do so before that support level is broken. If it does recover, it may be time to start re-establishing our position.




The VIX is trending down--a positive for stocks.




The latest data on the January effect (short):
http://marketsci.wordpress.com/2011/12/30/january-bullishness-on-the-wane-2/

Trading in the first week of January (short):
http://www.bespokeinvest.com/thinkbig/2011/12/30/what-to-expect-next-week.html

Fundamental

The latest ECRI reading--no deterioration:
http://advisorperspectives.com/commentaries/dshort_123011.php

Update on Market valuation:
http://advisorperspectives.com/dshort/updates/PE-Ratios-and-Market-Valuation.php
http://advisorperspectives.com/dshort/updates/Crestmont-PE-Ratio.php
http://advisorperspectives.com/dshort/updates/Q-Ratio-and-Market-Valuation.php
http://advisorperspectives.com/dshort/updates/Market-Valuation-Overview.php

Our Portfolios’ performance this year was mediocre. Generally in flat years, they tend to do quite well; but the volatility, and the high cash position they carried because of it, was a killer in 2011. In the final analysis, their longer term performance, while beating the S&P handily, still demonstrate all our frustration with a generally flat Market for the last ten plus years. The High Yield and Aggressive Growth Portfolios have only been monitored by third party of six years.

In the 2011 flat volatile Market, it is not surprising that the High Yield Portfolio performed the best while the lowest yielding, highest risk portfolio (Aggressive Growth) the worst.

Finally, the Dividend Growth and High Yield Portfolios provide a positive alpha, while all Portfolios have a significantly low beta.

S&P DG HY AG
1 year +2.09% +.41% +5.93% -2.63%

5 year -1.29 -.92 +9.76 +3.46

10 year +3.28 +41.13

Alpha +2.99 +.28 -.17

Beta .64 .67 .76