Big Pink in Portland
What happened to U.S. Equities this past week? Lifetime and Platinum members will see that little action took place other than a slight decay in performance for small- and mid-cap stocks. The first table lays out the broad picture while the second table separates the market into sectors and it is this information we use to manage the Sector BPI portfolios.
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Index BPI
The information to take away from the following table is that mega and/or large-cap stocks continue to move up while mid- and small-cap stocks are not participating in this market. How do I draw these conclusions?
Note that the two broad indexes, NYSE and NASDAQ declined in the percentage of bullish stocks while the S&P 100, NASDAQ 100, DJIA, and DJTA all increased in the percentage of bullish stocks. These latter four indexes are narrower in scope and focus on larger cap stocks. A healthy market would see the NYSE and NASDAQ moving up as well. One needs to dig deeper than the DJIA to see what is going on in today’s stock market.
Sector BPI
As one might expect, different sectors of the U.S. Equities market behave differently in this environment. Health, Industrial, and Real Estate moved up. No sectors are oversold so there are no new buying opportunities. While Utilities and Real Estate are overbought, we have long sold out of these two sectors so no new action is called for when managing the Sector BPI portfolios.
If I recall correctly, Sector BPI portfolios are primarily holding shares of Staples (VDC) and shares of VOO and VTI.
As readers will remember, a correction to a weakness in the Sector BPI original investing model was to move to U.S. Equities such as VOO and VTI when sectors are out of favor as is currently the case. If one does not make this move the market can easily continue to move up leaving a portfolio holding one sector and a lot of cash.
Explaining the Hypothesis of the Sector BPI Model
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Looks like we’ll have to watch Materials – VAW – during the week at ~38.
“Looks like we’ll have to watch Materials – VAW – during the week at ~38.”
Correct. I meant to add that in the write-up, but forgot. I’ll try to remember it daily, particularly if and when the equities market declines.
Lowell