Month in and month out, financial Media Talking Heads delivered lip-smackingly tradable dead-cat bounces, giving smart money the "wink wink--nod nod" signal to enter short positions and then take profits at precisely timed intervals. A symphonic cascading downward spiral that eviscerated jobs, 401ks and the savings millions who were left out of the loop became the easy pray for those of us who knew where to hunt and when to pull the trigger.
Despite the unfolding stock market panic around us today, I have no idea if we find ourselves in a stock market zombie apocalypse, nor would I dare inflict an ill-informed flesh eating expert opinion about market direction on you. With Chaikin Analytics, you are inoculated against the incredible amount of portfolio-shrinking verbal bullshit that I guarantee will feed upon the innocent in Business Media this week.
You have as good, if not better, data than the predatory zombie pros around you. And the data is speaking loudly.
- The Power Gauge of individual components of the S&P 500 currently results in a rating ratio of 27 Bullish/Very Bullish Stocks to 148 Bearish/Very Bearish stocks. That's the worst ratio we've seen since we started tracking it in the past 3 years.
- Cyclical sectors such as Energy, Industrials and Basic Materials are all ranked even worse than the overall large cap index, with defensive Utilities poised for the best market performance. That's a very defensive sign.
- Remember the Power Gauge is not heavily technical in nature. It's driven more by key fundamentals such as company free cash flow, price to sales and book ratios, earnings report cards and analyst estimates. Price action ultimately reflects these measures. And overwhelming, the fundamentals are soft
- The consumer drives more than 70% of the US economy, yet look at the broken intermediate trend on the corresponding ETF, XLY.
I know I've sounded like a broken record over the past few months about price performance catching up to fundamentals,. And while it appears that's what's going on now, we are responsible managers of our our own long stock positions and have stubbornly stuck to our rules in our Chaikin Power User Portfolio
- Friday's bloodbath caused stop losses to be be hit on several positions.
- We got hammered to the tune of a 15% loss on Flexsteel Industries in the opening gap-down, but that was the exception rather than the rule.
- Our discipline of raising stoplesses to 2x the Average True Range below the long term Chaikin trend has resulted in mostly profit taking and some solid double digit returns.
- We don't hide anything, nor do we ever claim that Chaikin Analytics is a perfect system. There's no such thing. We're outperforming the market on the long side in this, a very tough year.
- And remember, our long-only portfolio is hedged by short call option spreads which are designed to profit from market pullbacks or any emerging bearish trend. Here's our performance. The sideways to downward overall 2015 market performance has made our bearish bets incredibly profitable with as stunning win-loss ratio as you can see.
- All long and short positions are entered and managed based on the data and trading signals from Chaikin Analytics.
Never Fear the Talking Head again!
Later this week. When the Talking Head urges you to "get your shopping list ready" because "it's a stock picker's market," you can use Chaikin Analytics to cherry pick the very best of the best- poised for incredible bounce back price appreciation. You'll already know how to find them. So let's compare notes before Friday. Good luck.
-- Mike and AA