Finding Overweights – Use Excel Files

Scheduling Note: My wife and I will be traveling to Boston in a short while to spend some time with my youngest girl. In all probability tonights update will be late. It all depends upon how long we stay and the traffic coming home. My guess would be 8 or 9 pm eastern time.

Or underweights for that matter.  The new Excel files which have replaced our old method of distributing data to you, makes it real easy. At least in my humble opinion. You must remember that the overweight underweight definitions deal with relative performance, not absolute performance. In other words the performance relative to a base index.

An overweight Sector or Industry Group does not mean that sector will advance absolutely but relatively.  This is an important concept to understand. An overweight ETF or Stock can decline but in all probability less than the base index. Likewise and underweight can advance in a bull move. It’s just that in all likelihood its advance will be less than the base index of use. The reason this concept is so important, is simply so you can maximize profits in a bull phase and minimize losses in a bear phase.

OK so I will assume you understand that. If not please let me know. So let me assume you are following along with the Market Timing tab in our stock watch list:

Screen Shot 2014-07-02 at 7.42.02 PMThis timing model is not going to even try and catch every wiggle. This is an intermediate term model that will sit through corrections, and hopefully keep you in alignment with the big trend. So the question is; where is the strength? Let me start with sectors and the Excel Spreadsheet (If you do no know how to find it, send an email);

sectorOWAs usual click the picture for a full sized image. I sorted the report by the relative strength overweight underweight column. Above has the overweight’s and two market performs which I have crossed out (M comes before O  🙂 ).

The top ranking still belongs to electronics. Second, third, and fourth ranked are in short term downtrends within intermediate and long term up trends. A strategy might be to plan for a purchase if and when the short term trend resumes up. If I were looking at those three the corresponding ETFs might be: SMH, XLE or OIH, and XLU.

Sometimes however, you will find a sector that does not have an obvious ETF. Do a Google Search you may be surprised. For instance let us say your interested in the Food and Beverage sector. A Google search turns up:

foodI’m trying to get you passed the standardized what your friends trade ETFs. By the way this is not a food and beverage recommendation just an example, an exercise. Any questions?

Talking Points and Where to Invest for Better Yields: 

The High Cost of Low Fees (Servo)
Why is it so difficult to teach people to manage money? (Vox)
World Cup Showmanship (Market Anthropology)
Everything You Need to Know About Facebook’s Controversial Emotion Experiment (Wired)
What Investors Are Worried About Today (Morningstar)
CEOs: The More You Pay Them, The Worse They Perform (Psy-Fi Blog)
The dark side of booming employment (Economist)
Why are the super-rich so angry? (New Yorker)
What is Liquidity? (Part VII) (Aleoh)
The crucial FDA nutrition label battle you probably don’t know about, but should (WonkBlog)
Winning via Halftime Adjustments (Investing Caffeine)
The incapable soothsayers (Statistical Ideas)
Ocean acidification is rising at its fastest pace in 300 million years (BV)
Canada is better than America in at least seven ways (Vox)
The Power of Two (The Atlantic)
The Cost of Continuously Checking Email (HBR)
Citizen Bezos (NY Review of Books)

Where to Invest for Better Yields

Have a Great Day!