Sell in May and Go Away: 2020 Edition

SYNOPSIS

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Only the ignorant seem to think that “flattening the curve” for C19 actually reduces the overall number of cases or deaths. It may reduce the peak demand for hospital services, but it will just extend the pandemic from months to potentially years. The extra cases just get pushed out in time. Elementary statistics! The flatter the curve, the longer the time until it’s over. Meanwhile, flattening “the disease curve” steepens “the economic damage curve”… whether you measure that in bankrupt businesses, government debt, the depth and length of the upcoming recession, etc. People will die from the economic damage too. No one seems to be willing to discuss that.

Last week… This past week’s 5-day performance of these indexes shows the opposite of the previous week’s results. Mind you the previous week’s gains were a little bigger than this week’s losses.

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PTP… While the S&P/TSX Composite Index APAR declined from 62% the previous week to 26% over the course of last week, the S&P 500 APAR actually turned negative (from a +48% in our last report). Meanwhile, we jumped into portfolio repair mode last week as we told you last time. We simply had to eliminate one position that we jumped into too early and held too long after our sell-signal. Another example of departing from our normally disciplined PTA approach, because the fundamentals looked too good to be true. It turns out they were too good to be true! Anyway, we’re back on the plus-side, but are now holding just two stocks. While the major indexes may still be climbing most weeks now, They’re top-heavy with tech stocks with enormous market caps. So the bulk of the constituents in say the S&P or S&P/TSX Composite Index are barely contributing to the overall index.

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PTA Perspective… Sell in May and Go Away: 2020 Edition
A conversation that often comes up in the media every year in April is the “Sell in May” effect. Long-term data suggest that you could be far better off only investing in equities from November to the end of April every year. Then you could sell everything and take a six-month vacation. But even though the historical data still support that perspective in general, we show you the flaws in the argument, and the opportunities you’d be missing with that naive approach in this week’s edition of TrendWatch Weekly.

V-Bottom or Dead Cat Bounce? Always a Tough Call!

SYNOPSIS

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This cartoon is accurate and amusing as far is it goes, but it doesn’t go far enough. Zero percent is better than -80%! And almost none of those active fund managers in the 20% have ever done it two years in a row. So, it was dumb luck! But, if you don’t want to be a stock picker and regular trader as we are, passive ETFs on something like the S&P 500 are the way to go, with an average annual return of 10-12% (that’s average… don’t expect that every year, but you’ll have many 12%+ years too like 2019).

Last week… On a one-week basis you can see that both major indexes performed well last week.
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PTP… S&P/TSX Composite and S&P 500 APAR continued higher. (Remember that this is an annualized version of weekly trend.) However, as we warned you earlier our PTP APAR could have (and did) take a big swing lower. It’s part of the rebuilding process as we start from Ground Zero. We added one more position (prematurely, now that we think about it) and it promptly reversed its trajectory. We’d have a +130% APAR if we hadn’t made that mistake! Still, we want you to know that everyone experiences a few problems from time to time. The key is to resolve those problems as quickly as possible! That is our goal for this week. Portfolio Repair!wpid-bar_speedo_200508s-2020-05-12-22-19.png

PTA Perspective… V-Bottom or Dead Cat Bounce? Always a Tough Call!
So much is wrong about the rebound in equities after the catastrophic collapse we’ve seen recently. Too much rebound, too fast. This week we look into that a little more, but don’t come to any major conclusions one way or another. There’s simply nothing justifying the recent market rally, other than the fact that stocks fell too far too fast.

Investor Confidence: What Are The “Smart Money” Investors Up To?

SYNOPSIS

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It’s definitely bizarre times right now, so unusual tactics are called for. Unfortunately, stupid tactics result in highly destructive results. Throwing money at the biggest corporations and some token amount to citizens is not a solution. Try throwing money at medical research to solve this pandemic. There’s precious little evidence that this is happening at all.

Last week… On the one-week basis that you see in this chart, Canadian stocks were favoured once again.
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PTP… S&P/TSX Composite APAR jumped from 13% the previous week to 56%! (Remember that this is an annualized version of weekly trend.) Meanwhile, S&P 500 APAR only inched up from 10% to 14%.

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As usual, when shifting from 100% cash into building a new portfolio, who knows what the first few days will be like. We were lucky in a way. We bought shares in two companies. One stock rose a few cents by week-end, one fell a few cents. The net result: a PTP APAR of -37%. It could have been equally likely, and equally meaningless that the PTP APAR could have been -1000% or +1000%. Nonetheless, we still stand by a common metric like this, since once you have 5-10 or more holdings spread out over various acquisition dates, the APAR calculation quickly becomes meaningful. S&P 500 and S&P/TSX Composite Index APARs always have large numbers of holdings, so that’s never a problem.

PTA Perspective… Investor Confidence: What Are The “Smart Money” Investors Up To?
The short answer is that they are still in hiding. They totally missed the excellent return from equities in 2019, and are cowering even more in 2020. We use the State Street Investor Confidence Index (SSICI) to follow the so-called “smart money”. This isn’t an investor poll (“How confident are you in buying stocks?” Etc). State Street follows actual money flows of pension funds and other institutions with billions to invest. They provide an SSICI score to represent whether these funds are investing in risky assets (stocks) or safer assets (typically bonds). Their numbers should be reliable, give that we’re talking about $31+ trillion in assets. After reviewing the data we conclude once again that the “smart money” doesn’t appear to be very smart at all!

Profiting from Free Oil!

SYNOPSIS

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Yes, the price of crude oil went negative last week, at least in terms of the near-term futures contract. Follow that through the refinement phase and you do get gas stations paying you to fill up. That’s not too likely in real life, but it’s fun to think about! Before that would happen, gas stations would probably replace gasoline with hand sanitizer… far more profitable!

Last week… With a great week followed by a pretty good week, it shouldn’t be surprising that things might slow down. The S&P 500 lost some ground and the S&P/TSX Composite Index managed a small gain.
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PTP… You can see that we’re still 100% in cash. We’re not avoiding volatility (which we welcome). We’re avoiding too many kinds of risk. The S&P/TSX Composite Index APAR lost 3 points, while the S&P 500 APAR pulled back 21.

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PTA Perspective… Profiting from Free Oil!
Last Monday, West Texas Intermediate Crude Oil dropped to $0.00 per barrel. But it didn’t stop there! Before the session closed WTI was priced at -$37.63 per barrel. That’s what producers would have to pay someone to take it away. It didn’t stay there during the rest of the week, but we’re at a point of unbelievably low oil prices, as demand has dried up, and various OPEC & Friends countries are refusing to cut production. This week we bring you some thoughts on whether you can profit from this.

2020 – Q1 Review – Global Perspective

SYNOPSIS

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Ah, yes, the myth that diversification is the path to investing success! That’s only true if you’re referring to the success of your financial advisor or money/wealth manager. Broad-based buy & hold diversification is a sure path to failure, relative to consistent rotation through the best-performing regions and sectors. You can call that sequential diversification, if it makes you feel any better!

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PTP… This chart didn’t change much from the one we showed you last week. We’re still 100% in cash, and will stay that way for a while. We’re not avoiding volatility (which we normally welcome). We’re avoiding too many layers of risk.

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PTA Perspective… 2020 – Q1 Review – Global Perspective
After rolling out the Q1 2020 report card for North American stocks recently, it’s time to follow-up with a global perspective in this week’s edition of TrendWatch Weekly after a one-week postponement. We use two datasets to measure global equities performance: country ETFs and ADRs. Both are indirect ways to assess the worldwide situation, because Americans aren’t allowed to buy foreign stocks or ETFs on exchanges located outside the USA. Canadians have many more options, but we’ll keep it to the lowest common denominator. I think we all know that the results will be a poor Q1 2020 across the board, but we bring you all the details in this week’s edition.

2020 – Q1 Review – Global Perspective – DELAYED!

SYNOPSIS

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Yeah! Watching business news on TV can kill ya! So much misinformation, but we need something right? The print format of business news via Yahoo! Finance or similar platforms and newspapers isn’t much better, but they will occasionally pull in official documents from a company’s press releases or official regulatory filings. That’s no assurance of accuracy, but it’s better than some journalist, blogger or analyst pulling info out of his or her derriere! For the most part we try to stick with simple verifiable numbers. We’ll push them around and massage them and come to our own conclusions.

This compound does the restraint procedure of phosphodiesterase type5 chemical, which is the primary wrongdoer overnight cialis soft in the ineptitude wrongdoing. One sector that has grown exponentially for the past few years has been the market for treating erectile http://cute-n-tiny.com/cute-animals/dog-playing-in-the-snow/ purchase levitra dysfunction. It can work as a performance enhancer and it is a strong antioxidant as well. cute-n-tiny.com buying viagra in india The settlement quantity will certainly not be the free cialis cute-n-tiny.com same as the one that is for branded. Last week… While we have nothing but cash in our ProfiTrend Portfolio, we have to say that last week’s 4-day trading gains were nothing short of phenomenal. We keep looking at the numbers again to see where we might have miscalculated something. So far, no errors. These numbers are showing half of a bull-market surge in four days! That’s not to say that bull-market trends have returned, as you’ll see below, they haven’t, but wow!

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PTP… You know we made our exit the previous week into 100% cash. But we see this past week that our standard benchmarks actually flipped into positive territory from values below -100% last time.

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PTA Perspective… 2020 – Q1 Review – Global Perspective – DELAYED!
After rolling out the Q1 2020 report card for North American stocks last week, it’s time to follow-up with a global perspective in this week’s edition of TrendWatch Weekly. And, yes, the results are awful! But we’re delaying the details until the next edition. The long weekend should have allowed more time, but it didn’t work out that way. As usual though, all of the Data & Charts Workbooks have been updated over the weekend. Those are the numbers you need to trade. You’ll usually find the latest calculations on Saturday, but sometimes Sunday. It’s the commentary portion that sometimes slows us down.

2020 – Q1 Review – North America

SYNOPSIS

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A common mistake to be sure. At zero your price is still zero, no matter what you paid for earlier shares. And stocks do go to zero from time to time! Cut your losses and move on, before they become even bigger losses!

Last week… The previous week’s Dead Cat Bounce had no follow-through this past week. Offsetting gains and losses in our two benchmarks.

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PTP… Well, we did warn you that our PTP Portfolio might be empty by the time we published this edition of TrendWatch Weekly. It has to be worrisome that if current trends persisted for a year, you’d lose more than everything (which would be 100%). The big question is how long this sharp downward trend can persist. I think we all know that the S&P 500 and S&P/TSX Composite Index will not go to zero, let alone lower than that. But when will see some plus signs again?

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PTA Perspective… 2020 – Q1 Review – North America
While technically there were another two days of trading in Q1 2020, we’re declaring last Friday our cutoff to get on with our Q1 progress report. I think we all know that the results are pretty ugly! As with prior quarterly reports, we start with the North American results, and will follow-up with a global perspective in the next edition of TrendWatch Weekly.

Dead Bull Bounce?

SYNOPSIS

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Three up days last week actually, but those who have never seen a rapid-onset bear market before should know that the Dead Cat Bounce (Bull Bounce in this cartoon) should never be considered a V-bottom. V-bottoms (rapid recovery from a crash to a new bull market) almost never happen… for major market indexes, or even individual stocks. In the worst case, in the Crash of 1929, bull-hold investors lost 86% of the value of their holdings over just less than three years. Even the shortest bear, the Crash of ’87, saw most of the damage in a single day, but bull market conditions didn’t return for three months. The notion that this crash is over because of a substantial three-day rally like last week’s is absurd. We haven’t even seen the beginning of the global market collapse!

Last week… Dead Cat Bounces are inevitable, and last week was no exception. The gains didn’t offset the previous week’s losses, but may have given some investors a better price point to get out.
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PTP… The gain (reduced loss) in the benchmark APARs wasn’t as much as the media hype would have led you to believe last week. And, we did warn you that the 1380% APAR we had for the PTP last week was an anomaly due entirely to one of our tiny portfolio of holdings jumping 200% in two weeks. 116% is still comfortably above the S&P 500 and S&P/TSX Composite Index APARs. If we go to zero stocks this week (quite possible), we’ll have nothing to compare with the benchmarks.

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PTA Perspective… Dead Bull Bounce?
Our Perspective coverage is light this week as we start to get the first quarter 2020 numbers together for the next couple TrendWatch Weekly editions. We talk a bit more about current market conditions (dire!), and that sitting on cash and relaxing with TV news turned off can sometimes be a very effective thing to do! Instead of sweating over the virus, if you’re isolating at home, start evaluating or updating your investment strategy! What better time for that! Don’t go rushing out buying in tumultuous markets. Just assess the success rate of your investment tactics so far and think about how they might be improved. Do some backtesting! Read what some of the greatest investors have historically done!

Putting Bulls & Bears in Perspective!

SYNOPSIS

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If you don’t know anything about Dark Pools, this cartoon sums it up well. Large institutional investors have trouble buying or dumping huge numbers of shares (say a million shares of a $100 stock) on regular stock exchanges because they move the markets with their trades… usually away from their desired price. So Dark Pools hook them up (outside the exchanges) with other (anonymous) institutional investors, who might want to take the other side of the trade. It works. It’s legal. And it’s SEC regulated. It’s just that the rest of us don’t hear about those trades. It’s a great way for the big money to get out of stocks ahead of a predicted (or manipulated???) major market decline or buy them ahead of a major advance.

Last week… More devastation on top of last week’s devastation. No one has seen one-week changes of this size in ages.

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PTP… Now, this one, you’re probably not going to believe! While the benchmark APARs declined about another -100%, our PTP APAR has set a new record… with just three stocks, and two of them losers. One stock with over a 200% gain in two weeks can do that for your portfolio when you annualize out the results.

If we sold that one, taking huge profits, our APAR would be much lower… maybe even negative. Such is the nature of tracking stocks by our “speed of profit” approach.

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PTA Perspective… Putting Bulls & Bears in Perspective!
This latest bear market probably hit many investors way faster they they could have possibly imagined. If you’ve only been investing for the past decade or less, you’ve never experienced a bear market. This time in TrendWatch Weekly, we include both a refresher of the terminology and a history of bull and bear markets. The goal is to put this new bear in perspective… the “relative” in relative trend analysis™ (RTA).

Ides of March Edition!

SYNOPSIS

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Happy Ides of March (March 15)! Did you get out and stab someone today? Perhaps your financial advisor? Your full-service stock broker?

Last week… After just one week of calm, we were back into carnage again last week. When you know that -20% is normally a prolonged fall into a bear market, -10% to -15% in one week is pretty scary!
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PTP… With the benchmark APARs, the decline doubled for the S&P 500 week over week and dropped almost 4X for the S&P/TSX Composite Index. Meanwhile we’ve managed to keep the PTP APAR at +463% in spite of (or because of) selling our losers.

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Looking at the negative numbers, you have to realize that these rates of decline can’t be sustainable. After all you can’t lose more than all your money… which is what is implied here by how fast the major indexes are dropping. The open question is, when does the damage slow down and reverse?