Market Overview for 11/5:
The S & P 500 added 0.6 percent to an all-time high of 2,023.57 by 4 p.m. in New York, while the Dow Jones Industrial Average reached a record 17,484.53. Oil rallied 1.9 percent as U.S. stockpiles climbed less than predicted. The Stoxx Europe 600 Index rose 1.7 percent. The dollar gained to its highest level since 2007 versus the yen. Gold dropped to its lowest price since April 2010.
S&P 500 companies are beating analysts’ earnings estimates at the fastest pace in four years, while recent economic data have pointed to improvements in the U.S. labor market and consumer sentiment. Analysts estimates for Fridays jobs report are a gain of 240,000 jobs. Of the S&P members that have reported their latest quarterly results, 82 percent topped profit projections, while 61 percent exceeded sales estimates, according to data compiled by Bloomberg.
Yesterday’s notes contained a link I think everyone should look at; A breakdown of how the market performs after midterm elections (MarketWatch). In essence the best mid-term elections for investors turns out to be a Democratic President and a Republican Congress. Hmmm!
BTK (Amex Biotech Index)
Biotech’s as you should be aware is one of the strongest sector/groups. Here are the components of the Amex Biotech Index (BTK) if you prefer individual stocks as opposed to funds.
Of the 17 stock listed, only three are less than 90% of their respective 52 week highs.
While each of our 80 sector and industry ETFs advanced on Wednesday, the ones that advanced the most were the ones that have not done well. This suggests to me the shorts, ran for cover, quickly. Remember, virtually all bottoms begin with short covering.
Asset Class Long Term Timing
There is timing and then there is timing. Most people, heck most analysts look at the S&P and decide that everything is therefore bullish or bearish, well perhaps neutral. The Advisor Letter has a long term timing component. Why long term? To quote Jesse Livermore:
And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!
The monthly advisor letter, times asset classes as opposed to just a major index, then looks to the strong within. The design of the timing mechanism is meant to keep Financial Advisors on the right side of a particular asset class and to sit through corrections. Sitting tight through corrections is where the money is made. Of course getting out, avoiding bear markets is also a big concern.
This method does not attempt to buy bottoms and sell tops. It attempts to join the party after the party has started and to leave a little bit late but not too late, in other words giving the trend the benefit of the doubt 😉
The studies that have taken place have utilize the Primary timing only. Secondary timing is there for Financial Advisor/Personal use. If one is the nervous type use the secondary signal to hedge, if it’s against a bullish primary, or use it for probing the asset class with small positions anticipating a primary turn.
Today’s Reports and Earnings:
Talking Points and Malcolm Gladwell: Adversity Is the Best Teacher:
Americans Want New Congress to Fix Itself, Focus on Economy (Gallup)
Pyramid scheme or not, Herbalife is tanking (LA Times)
Two Election Winners (David Kotok)
Why IBM Gives Top Employees a Month to Do Service Abroad (HBR)
Valuation Update: Stocks are (Still) Expensive Everywhere (GaveKal)
Dollar Smashes Through Resistance as Mega-Rally Gathers Pace (Telegraph)
More Evidence of the Amazon Bubble Bursting (24/7 Wall St)
Ayn Rand vs. Adam Smith: the only midterm election that counts (Market Watch)
Tankers Matter But Not Nearly As Much as ‘Demand’ (Alhambra)
Study: Most Published Results in Financial Economics Are Wrong (Vox)
Here’s what’s grounding Netflix, Amazon and other formerly high-flying stocks (MarketWatch)
Infrastructure a Key Ballot Issue in Many States and Metros (Brookings)
Most Research on Why Investments Do Well Is All Wrong (Slate)
The Economy, and Voters’ Perception of It, Are Two Very Different Things (NYT)
Malcolm Gladwell: Adversity Is the Best Teacher
Have a Great Day!