Spring is coming.
Bullish Percent Indicators as they pertain to the Sector BPI portfolios call for no changes this week. Only one sector ETF is found in the over-sold zone so no reviews of the Carson, Franklin, Gauss, and Millikan are eminent.
A false notification was sent out earlier. Instead of scheduling this blog to go out tomorrow, I’m mailing it this evening. It will be short.
Index BPI
The most noteworthy bit of data from the indexes is the sharp increase in the NASDAQ 100 or the tech dominated index. That is the only index found to be bullish.
Sector BPI
Utilities (VPU or IDU) continue to be the only over-sold sector – and it declined further this week. Otherwise, no action.
Here is a potential flaw in the Sector BPI model, and I am continually trying to uncover these potential problems. With only an investment in Utilities, what if the market begins an upward movement over the next few months or even the remainder of the year? Anyone following the Sector BPI model would be left holding an “empty” bag of securities. It seem insufficient to keep all cash in SHY or SHV.
In situations such as we are now in, I’m inclined to hold approximately 50% of the portfolio in U.S. Equities on the off chance the market could take off and leave us bound to Utilities. This may only be a problem near at the beginning of an investment cycle as we have not had the opportunity to invest in many sectors. Something to think about.
Explaining the Hypothesis of the Sector BPI Model
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Lowell,
I think VHT hit 31.25% Thursday, could have a judgement call as a purchase.
Bob W
Bob,
Correct. I missed that as my Internet modem failed and I was off line for two days. Had I picked that up I would have purchased Health.
Lowell
And therein lies one of the vagaries of investing:^ )) Don’t feel bad I only checked it late on Friday and the move up was already started so I passed on the buy.
Bob W.
Checking moments ago, five sectors dipped into the over-sold zone. Based on volatility calculations to come up with portfolio percentage recommendations, the total comes to 88% of the portfolio so for the first time since launching the Sector BPI model we are butting up against the 100% limit.
The sectors I see in the over-sold zone are: Energy, Financial, Health, Materials, and Utilities. Utilities has been over-sold now for the past four weeks.
Lowell