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TriggerPoint Research ALERT! Big Gains – Near Highs

TPR Equity ALERTS! have been on a hot streak recently after several positions have been closed for some nice profits.

While the market continues to move higher, both long and short opportunities are continuing to present themselves.

As correlations continue to widen, the greater the opportunities for stock pickers.  As you will see in some of the most recent ALERTS!, there has been a much greater number of  winners of late.  Remember, these are short-term trading opportunities.

Just recently, the ALERT! for OfficeMax (OMX) produced a return of over 20% in less than 25 days!

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TPR Equity ALERTS! The Rundown for September 2013

Since our last update, many market moving events have hit the wires.  Federal Reserve Chairman Ben Bernanke and the rest of the crew decided not to taper -  which was a huge surprise and sent equities screaming higher and bond yields lower.  But, that is not the whole story. Since then, markets have been under some pressure as the government shutdown has left investors uncertain about the future.  Below is a table that details historical government shutdowns and how the markets performed during those periods:

 (Click to Enlarge)

Shutdowns

Two of the major draw-downs happened during the Carter administration as there was a dispute on whether government funds (Medicaid) should be used to fund abortion.  In 1978 the quarrel was about a 5% salary increase for members of congress and other government employees.  Now, during the 11 and 12 day shutdowns as shown in the table, the markets managed to move lower by -3.18% and -4.42%.  In many cases, shorter shutdowns (whether coincidental or not) actually produced positive results, especially during the Reagan era.  The most recent shutdown we have to compare to is the 21 day shutdown during the Clinton administration.  The shutdown began after a temporary fix from the previous 5 day shutdown on budgetary disputes and a Republican House and Senate demanding a 7-Year plan toward a balanced budget.tprtube

As of this writing, the S&P is about even since the September 30th shutdown.  Resistance on the daily chart for the S&P is building and we think it is going to be rather difficult for the market to move higher without first a downside test to around 1650-1660.  At that level there is some support from both volume at price and a longer-term trendline established in October of 2012.

SPY

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In this edition of The Rundown, we will look at the recent ALERTS! and their performance measures, risk statistics as well as highlighting some of the newest ALERTS! that have recently triggered.

Below is a summary that shows the ALERTS! that are still active.

Active ALERTS! 20131004

*Note:  Positioning and targets are not shown as these details are reserved for TPR members only.

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TPR Equity ALERTS! The Rundown for August 2013

Since our last update, we can see that markets peaked in August and have since retreated from their highs as tensions in Syria rise.  Most recently, Russian President Putin released a statement that Russia will continue to sell arms to Syria even if the U.S. decides to attack.  As it currently stands, the United Nations is on the sidelines and not placing any blame as to who “may” have used chemical weapons.  Of course Syria is denying that chemical weapons have been used.  President Obama has passed the buck on to Congress to decide whether or not the U.S. should intervene which will be put to a vote on September 9th.tprtube

We expect that markets will remain event driven and economic data dependent as the Fed still remains in control.  Bond prices have been dropping as the Fed still continues to contemplate their exit strategy.  Currently, markets are expecting a tapering of monthly bond purchases to the tune of around $10 – $20 Billion dollars in the next month.  Any more (or less) should cause both fixed income and equities to become extremely volatile.  Unemployment 201308

Economic data has been dismal with the most recent unemployment data being a good example to discuss.  While the unemployment rate dropped from 7.4% to 7.3%, the reason cannot be attributed to increased employment.  Rather, the labor force participation rate hit the lowest level we have seen since 1978. This indicates a lack of people actually seeking out work, thereby skewing the unemployment data.  Payrolls also came in less than expected at 169k vs. 180k with the prior month being revised down by 58k from 162k to 104k.

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TPR Equity ALERTS! The Rundown for July 2013

As discussed in previous posts, market volatility has almost disappeared as the VIX traded at around 12 on August 2nd.  That low level usually means that investors have little concern about liquidity and market volatility. At this point it looks as though sentiment has shifted to an extreme and the fear of  a market drop has vanished.  Recently, short-sellers have been pummeled as they were caught off guard by the rebound from the approximate 7% drop recorded in the middle of June.  That was quickly reversed in July as stocks traded higher off the liquidity provided by the Fed as they “clarified” their plans to taper bind purchases.  Markets have moved into all-time highs and the only roadblocks appear to be the fear of not being in the markets.

tprtube

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The recent BLS employment data came as a bit of a surprise with payrolls rising by only 162k vs. expectations of 180k.  However, the unemployment rate dropped by 0.1% to 7.4% to which the media touted as a success.  The reason the payroll number was such a surprise is that the trend in unemployment claims (the number of people filing for state unemployment benefits) and ADP private payrolls has been beating analysts expectations handily.

The only major concern in the economic landscape is the lack of inflation.  Recently the Federal Reserve was cited as saying that a drop below 2% for inflation could pose a real problem for the economy moving forward.


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TPR Equity ALERTS! The Rundown as of June 21st, 2013

In a recent turn of events, the 2nd Quarter of 2013 is looking as if sellers are gaining a foothold.  Market volatility has increased dramatically as several forces have collided to spook investors.  Take for instance the fixed income market. For the past 2 years, many have been calling for a correction in the bond market -  it finally made its way here.  Treasuries and Treasury Inflation Protected Securities alike finally broke down and the interest rate on the 10-year moved up to has topped 2.4%.  Much of this is being blamed on the uncertainty that the Fed would begin weaning the economy off the addictive substance known as quantitative easing (or asset purchases) As of right now, they are still buying upwards of  down to $85 billion per month.

In addition to this, President Obama cryptically announced Fed Chairman Bernanke’s retirement from the FOMC in a recent interview.  So, the question is, who will be the next Fed President and how will they approach economic growth, stimulus and markets?  This type of uncertainty has caused markets to wane into the end of the quarter.

tprtube

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Fixed income investor’s have since been looking to reduce the duration of their portfolio to reduce volatility and capture income from the increase in rates.  Duration in its simplest form is how long it will take before a bond matures.  Generally, the lower the duration, the less susceptible the bond is to any change in interest rates.  Lowering duration also allows the investor to capture the increased income in the interest rates as they rise over time.  Inversely, in a declining interest rate environment, low duration securities should underperform.

Stocks typically dedicated to producing income (aka bond substitutes) have been hit the

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TPR Equity ALERTS! Rundown as of May 7th, 2013

Markets continue to creep higher despite the “Sell in May” attitude that was widely reported by various statisticians, including ourselves in the previous rundown.  Economic reports have been coming in mixed but the latest report from the Bureau of Labor Statistics caught many off-guard as the unemployment rate dropped to 7.5% and payrolls rose by 165,000.  It is also worth mentioning that revisions were made to the two previous months which added more than 100,000 jobs to the prior reports.

Unemployment

Meanwhile, initial claims or the number of people filing for unemployment benefits,has been steadily retreating, which continues to signal strength in employment.

Claims

During earnings season, equities become quite volatile, and signals can reverse rather quickly after an earnings release.  We find it important to try to avoid ALERTS! for company’s that are reporting within approximately two weeks to avoid this volatility.  However, now that earnings season is on the tail end, many charts are beginning to show signs of potential breaks that may provide good opportunities.  Speaking of earnings season, a little over 80% of the companies in the S&P 500 excluding financials have reported as of today and the results are a mixed, but still slanted to the positive.

surpise

In the 1st quarter of 2013, companies have struggled to beat out analysts estimates for sales / revenue growth, but have handily beat on earnings.  Energy, industrials and materials have been the lagging sectors with the greatest percentage of misses while consumer discretionary exhibits overall relative strength.

In this edition of The Rundown, we continue to look at the more recent ALERTS! and their various performance measures, risk statistics as well as highlighting some of the newest ALERTS! that have recently triggered.

Below is a table showing the ALERTS! that are still active.

5-7-2013 4-28-03 PM

*Note:  Positioning and targets are not shown as this is reserved for members only.

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