Hiking in Olympic Rain Forest
Pay close attention to the following tables as there are a few new wrinkles spawned by comments placed in the last BPI blog post. As for recommendations that will impact the Sector BPI Plus portfolios – no changes. No activity is planned for the McClintock portfolio, up for review on Tuesday.
Index BPI
It has been a few months since we last witnessed any overbought indexes. This week we see two as the NASDAQ 100 and Dow Jones Industrial Average moved into the overbought zone. To me this indicates large-cap stocks are driving the market. We need to see more participation from small- and mid-cap stocks. In other words the NYSE and NASDAQ need to show higher BPI percentages.
Sector BPI
No significant changes since last week. Technology (VGT) is still overbought and we have Trailing Stop Loss Orders (TSLOs) set for VGT.
In the last row I show the equal-weight sector ETFs, beginning with RSPD. The color coding (dark green background) indicates which of the two sector options garner the highest five-year return. Take Energy as an example. RSPG returned a higher percentage than VDE. Of the eleven sectors, seven equal-weighted ETFs had higher returns compared to four cap-weighted ETFs.
Going forward here is one way to tweak the Sector BPI Plus portfolios. Assume Discretionary dropped into the Buy zone. When this happens, compare the five-year performance of VCR and RSPD. Purchase the ETF with the higher return. If this happened this week we would invest in VCR.
Explaining the Hypothesis of the Sector BPI Model
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