Weekly Recap – Keeping Score

As I’m sitting here writing this, I’ve watched the Pittsburgh Steelers go from demolishing the Cleveland Browns to nearly squandering what should have been another “sure thing” for the black and gold. And with Hoyer leading the charge for the Browns. Plus my Buffalo Bills managed to win it in overtime? The Bills? Dolphins beating the Patriots? What’s next? Dogs and cats marrying each other?

Since it’s Sunday and football season, this weekly’s recap seemed like as good as time as any to look back at some of our recent discussion topics to determine whether the Yinzer Analyst has gotten it right or wrong. If it was right, how’d we do? If it was wrong, what can we learn from this?

Good Harbor:
On the 27th we discussed whether recent mega-titan Good Harbor was going to be repositioning themselves into equities and the answer was a firm yes. Take a look at the following charts and you can see how their trades influenced the market in a few ETF’s. According to a friend, they went from 25%/75% equity bond to all in and replacing large cap equities with mid and small caps. If I had the resources, I’d love to look at their history and try to reconstruct what signals they were using.

gh5

GH4

Utilities:
Let it not be said that the Yinzer Analyst can’t admit when he’s wrong and in the case of a head and shoulders set-up with the utilities, we flubbed it but not as badly as the Steelers did. Instead of retreating, utilities were one of the stronger performers on the week with the XLU moving up .79% and with the possible right shoulder completely demolished. Yes, volume was lower over the last few weeks, but rose slightly last week to put the nail in the pattern. Looking at momentum versus SPY, XLU looks like it wants to challenge the downtrend line and with the strong buying activity and with the RSI still outside the overbought territory, it could do it.

xlu-spy3

Europe/Treasuries:
With the de-escalation in the Ukrainian conflict and Mario Draghi’s pledge to think about going all in while he initiates a new ABS and covered bond purchase program, risk appetites are rising across Europe and this one is leaning our way. While the Euro continued to crack following Draghi’s announcement of further easing, European equities took the ball and ran away with it. Eurozone stocks (using EZU) loved the news while some of the PIIGS and France strongly outperformed on the news.

EURWEEK2

EURWEEK

In fact, looking at momentum compared to SPY, EZU is bouncing off lows not seen since last summer and while this move has cleared the downtrend line, I’m sure a few of my compatriots could be thinking the ideal buy has already come and gone. Let’s shift to a weekly basis and you can see that this move could be in it’s infancy. If there was one place to overweight, I’d favor Europe. I’ll do another posting in the next few days on where we could position ourselves to find the point of maximum advantage.

emu

emu2

Weekly Recap:
So with all of that in mind, what happened here in the U.S.? The focus of the week was on the defensive’s as utilities and staples enjoyed solid weeks while REIT’s took the pole position for the week and consumer discretionary stocks made a strong showing continuing their slow and steady march higher after a disastrous start to the year. Among the broader U.S. index ETF’s the winners were those with the right overweight’s to those defensive sectors and benchmark/underweight’s towards energy stocks that gave up the entirety of last week’s gains.

broad

Foreign Stocks:
Emerging market stocks had a hell of a week as did China were the consolidation in MCHI seems to be over as the overbought conditions we discussed several weeks ago have largely been burned off. But after only a month off, this strong performance has already pushed the major China ETF’s back into nearly overbought territory. Their A-share counterparts at ASHR tell a similar story. And lest you think it was all Russia or China, India also put some big numbers on the board for the week.

mchi3

ashr1

ssec2

Look at the table below and you can see the shift from U.S. to Foreign and developed to EM. Will this trend continue ? Wait and find out.

int2

Bonds:
As you’d expect, about the only thing that made it into the black for the week were short term bonds thanks to their low low duration. Duration is your friend only when it’s going your way. The bond sell-off started on Tuesday with Good Harbor’s reallocation out of IEI and rumors of a cease-fire in the Ukraine but the TLT was nearing overbought territory and momentum scores were close to the highs for the year so a cooling off and move back to strong support was overdue. There’s strong support at $114.30-$114.40 and the 50 day exponential moving average at $114.90.

tlt

What to Watch for this Week:
I’m still in shock over the AFC East but my goals for this weeks are:
1. Know Your Mutual Fund Manager: Redefining closet cases
2. Monetary Policy and You: How to Play Europe
3. Promised posts on Agricultural REIT’s

Don’t be afraid to let me know what you’d like to hear more about. Suggestions are always appreciated.

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