Back into the Neutral Zone

SYNOPSIS
Most major indexes were up last week with a terrific rally that started at the end of the previous week. In spite of great one-week results, however, most of the indexes we track here are still trending lower… especially the S&P/TSX Venture Index.

ProfiTrend Portfolio… Our PTP annualized growth rate (AGR) is now at 219%, still very high given recent events. That compares with +12% for the S&P 500 and -15% for the S&P/TSX Composite Index! Although we’d like to believe otherwise, we suspect that the PTP “speed” will slow down somewhat. With a very small portfolio, such as we have right now, and very short holding times in some instances, the annualized results for the PTP are susceptible to greater weekly swings. All the same the math is correct, and the same that is applied to the major benchmarks.

Seasonality… We continue our discussion of what November has in store as far as calendar effects go.
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State Street Investor Confidence Index… We include the just-released October results. The current global index fell to 115.1 in October, down 8.8 points from September’s revised reading of 123.9. 100 is considered the neutral point in the balance between risky assets (i.e. stocks) and low risk assets (i.e. bonds). The regional breakdown continues to favour European equities, although that is the geographic region that fell the most this month. It’s still quite remarkable, that up until now “the smart money” has been devouring European equities, while virtually everyone else has been selling like crazy.

Topic of the Week… Back into the Neutral Zone
We continue to monitor the “correction”, and what now might be a recovery to the upside. The proportion of equities that have positive trend values is now in what we call a “neutral zone” (40% – 60%). We discuss what investors might do now, while waiting for a breakout up or back down in the weeks ahead.

So, What Do We Do Now?

SYNOPSIS
Most major indexes were down last week in spite of the nice Friday rally. The trends for Canadian small caps (S&P/TSX Small Cap Index and S&P/TSX Venture Index) remain extremely negative. You won’t see any positive trend values at all in our weekly chart.

ProfiTrend Portfolio… Our PTP annualized growth rate is now at 282%, blowing out any previous record we’ve ever had. That compares with -32% for the S&P 500 and -42% for the S&P/TSX Composite Index! How can that be possible??? Well, it probably won’t last for long, but we’ll explain it to you below. Weird things can happen when you’re mostly in cash, and playing both the upside and downside in equities.

Seasonality… We continue our discussion of what October and November has in store as far as calendar effects go.

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Topic of the Week… So, What Do We Do Now?
This week we stick with a general chat session about today’s markets, which are still clearly tilted down, down, down… in spite of last Friday’s bounce and some follow-through on Monday and Tuesday. It takes more than a couple happy days to reverse a 10+ week trend. We’ll talk about alternative strategies for situations like this, including going long and short at the same time. It doesn’t always mean that one cancels out the other.

Featured Video… Bob Janjuah, senior independent client adviser at Nomura International Plc. Janjuah argues for more downside ahead… perhaps 15-20%. Check it the interview, and see if you find his arguments compelling (or not).

2014 – Q3 Review – Part 2

SYNOPSIS
All major indexes ended lower again last week. The trends for Canadian small caps (S&P/TSX Small Cap Index and S&P/TSX Venture Index) remain extremely negative. Even Nasdaq is now faltering.

ProfiTrend Portfolio… Our PTP annualized growth rate is now at 32%, down from the previous week. But that compares with -42% for the S&P 500 and -59% for the S&P/TSX Composite Index!

Seasonality… We continue our discussion of what October and November has in store as far as calendar effects go.
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State Street Investor Confidence Index… We include the September results once again. The current global index up to 123.9 in September, up 3.8 points from August’s revised reading of 120.1. 100 is considered the neutral point in the balance between risky assets (i.e. stocks) and low risk assets (i.e. bonds). The regional breakdown continues to favour European equities, contrary to popular opinion. Note that the overall numbers run contrary to everything you’ll see below in terms of the shorter-term outlook.

Topic of the Week… 2014 – Q3 Review – Part 2

Following up on reader requests, we have more coverage of Q3 results. It appears that some of you would have preferred to see individual quarters addressed separately, as opposed to the year-to-date format we prefer to use. That’s fine. We’re happy to oblige. In fact we’ve prepared separate charts isolating each of the first three quarters. It’s a good reminder how relative performance can change across broad indexes, sector indexes and US vs Canada vs globally.