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 27, 2012
S&P 500 Index
13,228.31 as of 4/27/12
+9.13% YTD
NASDAQ
3,069.20 as of 4/27/12
+17.81% YTD
+6.95% 52-week
Performance For Proprietary Investment Models
CWM Income Bond Fund Model
+1.595% 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
+8.456% 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
+4.445% 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, but changing next month.
 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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- This week was all about Apple and the Fed. Prior to their blowout earnings report, the stock was as low as $560's range from a $644 high earlier this month.
- AAPL is a 17.52% weighting in the Nasdaq 100 (QQQ), a 4.37% weighting in the S&P 500 (SPY/IVV/VOO), and a 18.71% weighting in the S&P Technology Sector Index (XLK). Significant stock moves in AAPL alone are enough to potentially "move the market" these days.
- Benign Fed comments helped maintain the rally that Apple touched off.
- We have one trade in our models this week, a buy in the Income Model.
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Sell in May and Go Away?
You may be familiar with a number of clichés with regards to investing, such as "Buy Low and Sell High", or "The Trend is Your Friend", or this week's topic, "Sell in May and Go Away". According to Wikipedia, the original saying is "Sell in May and go away, stay away till St. Leger Day", referring to the last race of the British horse racing season. So what about this saying? Does it have any validity? For those of you who believe in efficient markets, you will either have to adjust your thinking somewhat or just skip to the next section.
S&P Capital IQ, a research arm of Standard and Poor's, took a look at this idea to see if it had any merit. They looked at the price changes of the S&P 500 index from 4/30/1945 until 10/17/2011. Excluding dividends and trading costs, below is a graph of the returns. This assumes you buy in November and then sell and go to cash in May.
If you are having trouble reading the returns you will see that from Nov-Apr the S&P returned 6.8% while only 1.2% from May-Oct. Nobody really knows why this is happening, or why it persists. Some may argue that if you exclude 1987, 1998, and 2008 the effect is less pronounced. I think that may be true, but unfortunately we as investors can't decide which years to avoid in hindsight.
You can actually improve on the returns if you select two sectors of the S&P 500 during May-Oct. Interestingly enough, these returns work in small capitalization stocks as well as a global basket of stocks. It is not tailor-made for just the large cap US market, which helps us feel more confident about the strategy. See below.
The above graph compares returns if you held the index (Global, S&P 500, or S&P 600 - small cap) for Nov-Apr and then rotated to sectors for May-Oct versus holding the index all year long. This rotation strategy offers at least a 3% return per year over "Buy and Hold".
Let's take one final step: instead of holding the index from Nov-April, let's rotate into five sectors that historically have done well during that time of the year.
Using the sector rotation strategy you nearly double your returns per year! Finally, this strategy has been less volatile than just buying and holding.
So you can see how this strategy fits our philosophy here at Camelback Wealth Management. When we invest, we are trying to load the dice in our favor. It doesn't always work, but over time we should expect to beat "Buy and Hold" with this and other strategies.
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In The News...
Earnings
On the positive, U.S. corporate earnings and forward guidance have been most impressive: - With 1/5th of the S&P500 reporting so far, 75% have beat estimates
- For the 1st time in 3 quarters, more companies are raising guidance than lowering guidance
- And some outstanding post earnings moves by 2 tech giants: MSFT rose +4.5%, EBAY +13%
Some interesting earnings comments from major corporations about Europe... McDonalds - Europe delivered solid comparable sales growth of 5.0% and operating income growth of 4% (8% in constant currencies) for the quarter. Performance in the U.K. and Russia led the segment's sales growth, with France and Germany also contributing.
IBM - Europe is not just a homogeneous breakdown of countries. In the U.K., we had 10% growth, U.K. That's the 10th consecutive quarter of growth in the U.K. So it's not as if that's 10% on an easy compare. That's 10% on 2 years of real performance out of the U.K. business. So I think they've done a great job. Spain, we had growth for the sixth consecutive quarter. In Germany, we had growth for the second consecutive quarter. On the flip side, we're still down in France and down in Italy, but I think on balance, Europe to me, looks pretty stable.
Coca Cola - Actually had +6% volume growth in Spain.
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Tale of the Tape
Apple
Last week's market drivers were twofold for the most part, Apple and the Fed. AAPL fell sharply to begin the week after hitting an all time high of $644.00 earlier in April. In fact, the situation looked grim prior to AAPL's earnings release mid-week last week, as the stock traded as low as the $560s range and dipped below its 50 day moving average for the first time since last December. Nevertheless, AAPL posted strong numbers and the stock immediately sprung to life to finish the week with a good showing, and having an influential weighting in several major indexes and index products. AAPL is a 17.52% weighting in the Nasdaq 100 (QQQ), a 4.37% weighting in the S&P 500 (SPY/IVV/VOO), and a 18.71% weighting in the S&P Technology Sector Index (XLK). Significant stock moves in AAPL alone are enough to potentially "move the market" these days. AAPL's strong numbers coupled with benign comments from the Fed lifted equities out of a two week hangover to resume 2012's uptrend, with the SPX (S&P 500 Index) closing above 1400 (1403.36) on Friday.
Out of Limbo
The "range bound" technical characteristics of the equity market pointed to a market that was struggling finding direction in an area of "limbo", but last week we saw some evidence of strengthening technicals to finish the week. Areas that had provided technical resistance including 1380 and 1388 in the S&P 500 were surmounted with ease post AAPL's earnings release. Having tested its 50 day moving average on several occasions in the past few weeks and successfully bouncing each time, the S&P seems to be on solid footing once more and may be able to make a near term run at its high of 1422.38 that was touched in early April. Reflective of the "risk on" dynamics of the late rally last week, the VIX plunged from the 20s well down to a16.32 as institutional investors began to unwind protective put positions in some cases that were likely established prior to the AAPL release and the anticipated FOMC comments. Interestingly however, VXX (iPath S&P 500 VIX Short Term Futures ETN) saw impressive net inflows last week as the fund reeled in more than $250 million despite the price action in the VIX index and the VXX product itself. Potentially, institutions are using the drop in the VIX as an opportunity to establish volatility hedges going into the late spring and early summer months (see above!).
Commodity and Currencies
Commodity and currency-based ETFs were relatively quiet on the whole last week despite the fact that the Euro really began to move in a positive direction to end the week. FXE (CurrencyShares Euro) has been slowly trending higher versus the U.S. Dollar and is now above its 50 day moving average for the first time in about a month. Meanwhile, natural gas ETFs including UNG and NAGS for example vaulted higher last week on rising prices in the underlying futures and crude oil related ETFs such as USO and DBO for instance also grinded higher.
With the first week of May upon us in the coming trading week, we will see if the S&P 500 has the staying power to maintain its posture north of 1400 and if expectations of volatility in the near term remain low among market participants.
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Trades For The Week
There is one trade this week in our proprietary Income Model.
Global All-Cap Dividend-Only (GACDO) Stock Model
We are only long in (4) of the (13) eligible stocks in this model.
The model remains up +8.456% YTD.
Income Model (Bond Funds)
One buy this week. The model is up +1.595% YTD. Emerging Markets Stock Model We are long in (9) of the eligible (20) stocks in this model.
The model is up +4.445% 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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