Japanese Garden
Based on Bullish Percent Indicator data, we are in a bear market. This despite a GDP growth rate of 4.9% in the third quarter. Those of you managing a portfolio using the Sector BPI Plus model will find many opportunities this week as eight of the eleven sectors are overbought.
Readers who have been regular followers likely noticed that I’ve been positioning portfolios to take advantage of this oversold condition with exception of the Schrodinger and Copernicus. Those two portfolios are managed quite differently.
Index BPI
For the first time since 10/14/2022 all the major indexes are oversold. High interest rates are one factor in keeping a lid on equities in the U.S. I anticipate a year-end rally so I’ve been putting cash to work in the oversold sector ETFs rather than sitting on cash.
This coming week will be a busy one for portfolio reviews so come back to see how the different portfolios are constructed. The portfolios definitely up for reviews are: Bohr, Franklin, Huygens, and Schrodinger.
The Schrodinger is of sufficient size for Schwab to “tax manage” the account so it will be interesting to see what adjustments they might make during the next two months.
Sector BPI
Now we come to the section where oversold sectors are identified for purchase. Industrial and Technology are two new additions and Health returns to the oversold position.
To raise cash to fill these oversold recommendations, there are times when I might need to sell of shares of VTI, VOO, and/or ESGV. I’m trying to convince owners to add fresh cash at this time in order to take advantage of the oversold condition.
Comments and Questions are always welcome.
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As of 11/2/2023 we see a few changes in the BPI data. Communications (VOX) dropped down into the oversold zone joining, Discretionary (VCR), Staples (VDC), Health (VHT), Materials (VAW), and Real Estate (VNQ). Time to make sure VOX is fully populated. I show VOX should be approximately 10.1% of the total portfolio.
Energy (VDE) moved into the overbought zone so if the portfolio is holding this security, place a 3% TSLO on it.
Industrial (VIS), Utilities (VPU) and Technology (VGT) moved out of the oversold zone so do nothing. Just don’t add more shares to the current positions.
Lowell