Trading Signal
For Stocks
There is no change to our trading signal this week as the techinicals and fundamentals for stocks remain favorable.
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Market Performance
As Of Friday April 6, 2012
S&P 500 Index
Performance For Proprietary Investment Models
CWM Low Duration Bond Fund Model
+2.98% YTD 2012
-0.97% 2011
+7.25% 2010
+17.14% 2009
+8.49% 2008
+7.84% 2007
+5.35% 2006
CWM Income Bond Fund Model
+1.249% YTD 2012
+3.88% 2011
+7.79% 2010
+22.74% 2009
+1.24% 2008
+6.30% 2007
+3.75% 2006
-1.21% 2005
+5.54% 2004
+9.08% 2003
+6.64% 2002
-0.14% 2001
+1.97% 2000
CWM Global All Cap Dividend-Only
Stock Model
+6.485% YTD 2012 -0.02% 2011 +38.15% 2010 +91.34% 2009 -14.97% 2008 +24.08% 2007
+20.13% 2006
+16.28% 2005
+28.39% 2004
+75.01% 2003
-9.95% 2002
+22.87% 2001
+19.97% 2000
CWM Emerging Markets Stock Model
+2.652% YTD 2012 -14.56% 2011 +30.88% 2010 +104.83% 2009 -14.41% 2008 +53.77% 2007
+50.32% 2006
+7.83% 2005
+11.15% 2004
+94.42% 2003
+115.99% 2002
+15.79% 2001
+1.20% 2000
All fees are net of advisor fees. Past performance does not guarantee or imply future results.
Some results from a back test.
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7.5% Annual Income Is Available Today
 If you have cash sitting in a money market or savings, more than likely you are getting next to nothing in interest from your local bank.
If liquidity is not a concern, we have access to a Private Debt Fund that is part of the fixed income asset class (i.e. bonds) that is currently paying 7.5% per annum and is adjustable when interest rates eventually rise. FUND HIGHLIGHTS 7.5% Annual Rate (Adjustable) $5,000 Minimum Registered with the SEC 5 to 6 Year Maturity Hedge Against Higher Rates Hedge Against Inflation If interested, please give us a call today to find out more about this opportunity.
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Quote For The Month"Life would be infinitely happier if we could only be born at the age of eighty and gradually approach eighteen.
-Mark Twain |
Don't Allow Your 401(K) Plan or Annuity To Be Unmanaged
Do you have a 401(K) plan and/or annuity sitting there doing nothing?
Are you confused as to which funds are the best to invest in at this time?
Now is not the time to Buy & Hold in the current market environment.
We Can Help!
Whether you are currently employed or retired, we have dozens of actively managed 401K and annuity models deployed and we can customize a model to fit your company's existing 401K plan as well.
Contact us for more details about our actively-managed programs to put your money back to work.
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Do you have multiple Financial Advisors managing your investments?
In this day and age it's common for many investors to have their investments spread across several financial advisory firms.
If you are one of those folks you should know that we provide a service, at no charge to you, that will summarize all of your investment holdings on one (1) simple report so that you can see how all your investments are doing.
If you're interested in participating in this free service give us a call or shoot us an email to get started today! |
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New Investment Opportunities & StrategiesSpring 2012
Classes will be held from
March 22nd through April 19th
Every Thursday
7pm to 9pm
DU Campus, Room 210
Guest Speakers include Professor Dr. Thomas Howard from the University of Denver, Anthony Baruffi from SNW Asset Management, and Richard Bornhoft with Equinox Investments. |
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- Happy Easter from our family to yours!
- Being a shortened work week due to the Easter holiday, stocks began the first week of April with strong selling on Monday and Tuesday only to see the markets reverse themselves on Wednesday and Thursday. After all of the dust settled, stocks finished last week essentially flat. The S&P 500 Index inched out +0.07% gain while the Dow Jones Industrials Index lost a measly -0.16% loss over the same period of time.
- Despite the recent sell-off of stocks, the decline over the last few days has not negated the overall bullish technical pattern. We continue to remain optimistic over the near-term (end of May or possibly into late June).
- On Friday of last week, the U.S. government reported that the U.S. economy added just 120,000 jobs in March, well short of expectations. Ordinarily, the news would have reverberated on Wall Street, roiling markets. Instead, many trading desks were deserted as traders and investors, alike, took the day off in observance for Good Friday. Expect stocks on Monday to open lower as investors process the weakening jobs data.
- On the heels of the disappointing jobs number, there will be a trifecta of important inflation data due out this week. Wholesale Inflation (aka PPI - Producer Price Index) will be coming out on Thursday, the Consumer Price Index (CPI) will follow on Friday. Also on Friday the University of Michigan Consumer Sentiment Survey will be released. If any of the aforementioned turns out to be lower than expected by Wall Street it should keep the door open for more Federal Reserve easing (i.e. QE3).
- The legendary 60-Minutes reporter, Mike Wallace, died Saturday evening of heart failure; he was 93.
- There are no trades in any of our models this week.
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Are Stocks Headed
For A Near Term Correction?
Any of our long time readers know that we never try to predict the direction of where a particular market, or even security, is headed in the future. After all, none of us really know what the future has in store and we would implore you to run away as fast as you can from anyone trying to tell you otherwise. At the end of the day no one has the proverbial crystal ball and there are no short-cuts when it comes to sound investing.
Rather, what we do at Camelback Wealth is follow trends. We do not try to predict how long a trend will last. When a new trend (up or down) begins, assuming we like the security, we gladly hop on board and ride the trend wave for however far it will take us. Sometimes a trend will last for months, other times it may only last for days or weeks. What we do know, from years of experience, is that when one is armed with the right tools, trend following will get it right a lot more times than it won't.
Speaking of predictions, if you've been watching CNBC lately during the work week, like we have, the popular message from many "experts" out there seems to infer that "stocks have risen too far, too fast". For example, we saw quite a bit of selling occur in regards to stocks just last week as the equity averages (i.e. S&P 500 Index) moved lower for the week as a whole.
If the pundits are right and stocks have risen too fast then, one could argue, a major downside correction would certainly be on the horizon for investors in the not-so-distant future. After all, whenever markets accelerate too quickly it usually results in a bubble - this applies to any asset class (stocks, bonds, real estate, commodities, etc...). The bigger the bubble gets the harder the burst. One only has to look back to the 2007-2008 real estate bubble as case in point as one of many recent bubbles that has occurred here in the U.S.
So, back to the original point. Are the technicals for stocks telling the same story that many on Wall Street seem to be espousing lately? The short answer is no. The technical data for stocks are actually telling a very different story than what you may be hearing from many in the media.
This aforementioned disconnect between the math of the market and what many in the media are saying raises (2) very important questions for today's column: - What exactly are the technicals saying? and
- Why the disconnect?
The Technicals For Stocks... With the first quarter of 2012 officially in the books, from a pure return standpoint, stocks have posted one of their better quarters in years. Contrary to the opinion from many in the industry that "stocks are too expensive" and/or that "a correction is needed", the technicals are telling a very different story right now. Of course, we don't know what we don't know. Meaning, no one of sound mind is in position to accurately predict a natural and/or economic disaster that could be looming on the horizon - which would throw a monkey wrench into the entire global financial market. With that being said, barring an unforeseen negative event or disaster, our expectations for stocks is a continuation upward movement over the next 8 to 12 weeks of up to 10% from today's current stock valuations. Consequently, we believe that the disconnect between what many "experts" think about the current direction for stocks and what the technicals are revealing is going to baffle many of those same permanent bears or doomsayers who've been screaming the loudest for a downside correction. These are the same folks who most likely sat on the sidelines back in 2009 and missed an incredible positive run-up in stock prices as well as the recent gains by stocks starting in mid-December 2011 through today's current date. For years now we've been preaching "process over opinion" to our clients. Meaning, trust the math or technicals of the financial markets over rumor and conjecture or what we like to also affectionately call "market noise". At this time in the market, with a strong run up for stocks the convenient sentiment may be to say that stocks must be going down - just look at what happened in 2011 with regards to stocks. We caution our readers to not get wrapped up in any bearish sentiment and recognize that today's global economic environment is not similar to what we've experienced last year with Europe - specifically Greece. Now that the IMF and EU have been able to kick the can down the road further they've bought themselves more time and have allowed the rest of the world to re-focus on what really matters, growth! To be clear, by no means are we saying that the EU mess is behind us - it's far from being over. However, with the Greek Tragedy muted, at least for the time being, we strongly believe that the equity markets are poised to continue higher into the end of May and possibly even longer. Why So Bullish? The primary reason for our bullish outlook is because the technicals for most of the stocks in the universe remain above their 200-day Moving Day Average (MDA) - which indicates strong bullishness by equity technicians. Furthermore, since mid-December the Dow Jones Industrials Index has only fallen below it's 20-day Simple Moving Average SMA twice. If you are a Technician, like us, this is good news! Additionally, it's worth reminding our readers that the same technical data that we are looking at is public information and all of the big investment firms (i.e. institutional money, hedge funds, etc...) are looking at the same data we are. Of course, one needs to know 1) where to look and 2) how to interpret the data. With that being said, whether you agree with the process or not, there's a lot to be said for following the herd mentality (aka trend following) when it comes to investing.
So, Why The Disconnect?
While we do not claim to be medical practitioners in the field of psychology, despite the fact that our occupation is impacted by the science from time to time, we do strongly believe that there are a couple of things going on as to why we, as investors, are hearing one thing from some in the media but are seeing another from the technical data.
First and foremost, as human beings we are not adequately wired, psychologically, when it comes to investing. It's as simple as that. The human condition tends to believe that anytime something goes up so quickly there must be a hard landing waiting for us around the corner. This way of thinking is cornerstone to the common expression "it must be too good to be true". If that's not reason enough, the majority of investors got burned by stocks during the Crash of 2008 and those psychological scars are still very close to the surface for many investors.
How many times have you talked yourself out of getting into a stock - only to see it take off in price without you onboard? Or, conversely, how many times have you talked yourself into holding on to a stock because you love the company, for whatever reason - only to watch it crater in price? We've all been there before at one time or another.
As humans we tend to rationalize a situation to fit the narrative that is convenient for us. However, the financial markets are unforgiving and uncompassionate when it comes to investing. You're either on the right side or the wrong side of the trade - it's one of the few things in life that is definitively black or white. Never forget that for every investor who believes buying a stock is a sure thing, there's someone on the other side of the trade selling the same stock thinking the same thing.
The second dynamic that we feel is driving the disconnect is the media. Over the past 2-3 weeks it has been common to see on networks such as CNBC one "expert" or another espousing their opinion that stocks are "overbought" or "too expensive". Sound familiar?
We would caution our readers to not lose sight of the fact that the media's #1 job is to get eyeballs on to their program and keep them "entertained" for as long as possible. Television is in the entertainment business - regardless of what genre it represents (i.e. news, business, hollywood, etc...). TV has always been about ratings and probably always will be. The more enthusiasm a network can generate (rightly or wrongly) the more viewers will likely tune in to their program. If there's one thing on Wall Street that never goes out of fashion, it's experts giving their opinion whether we asked for it or not.
In summary, as we've illustrated above, one of our primary jobs going forward will be to ignore the market noise and forge ahead with the continued upward trend for stocks for however far the trend may take us.
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Tale of the Tape
The action last week for stocks saw a dramatic decline, trading down into the support level at the 1,394 level for the S&P 500 Index. The current pattern for stocks suggests that for the past four (4) weeks we've been trading randomly in a double-3 formation in a range between 1,388 and 1,422. This type of pattern is considered to be a minor corrective pattern. It also suggests that once the aforementioned pattern is complete the market will resume the directional movement we have had prior to the sidewise moment; which, in this case, would be a continuation to the upside.
The objectives that we've been talking about over the last several weeks of the 1,434 to 1,444 levels on the S&P 500 continue to be valid. The decline over the last few days has not negated the overall bullish pattern.
The critical level on the downside for Monday is going to be 1,391.55. A penetration below this level would suggest a further decline to 1,388.60. There is only a 30% probability for the market to decline through the 1388.60 level on Monday. Should the market penetrate this level then a decline down to the 1,388 to 1,376 levels will be signaled. This would represent a buying opportunity - not a place to exit stocks.
The key level on the upside for Monday is 1,409.40. A penetration of this level would suggest a retest of the critical pivot in this pattern of 1,414.00. We have been above this level a couple of times, but have been unable to follow through to the upside. As mentioned earlier, the corrective phase suggests that we could be in this range for another 3 to 5 days before the market is able to rally back up.
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News Articles of Interest...
Oil Prices Still A Factor "The world is not yet out of the danger zone," said Christine Lagarde, the IMF's managing director, speaking in Beijing. "The rising price of oil is a new threat that could derail the recovery. I think it is a major threat. Optimism must not lull us into a false sense of security. The global economy may be on a path to recovery, but there is not a great deal of room for maneuver and no room for policy mistakes." The Telegraph How Do We Bring Apple's Overseas Cash Back To The U.S... "Repatriating the cash from offshore would result in significant tax consequences under current U.S. law. We have expressed our views with Congress and the administration. We think that the current tax laws provide a considerable economic disincentive to U.S. companies that might otherwise repatriate the substantial amount of foreign cash that they have." Apple CFO, Peter Oppenheimer.
I anyone in Washington D.C. listening???
Harvard Business Review
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Trades For The Week
There are no trades this week in any of our models.
Global All-Cap Dividend-Only (GACDO) Stock Model
The model is up +6.485% YTD.
Income Model (Bond Funds)
The model is up +1.249% YTD. Emerging Markets Stock Model The model is up +2.652% YTD.
Low Duration Income Model (Bond Funds)
The model is up +2.980% YTD.
Commodities There are no new trades for next week. Shorts There are no new short trades nor do we own any shorts at this time.
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