A few weeks ago I called for a Pull-Back to set up a Buying Opportunity. That forecast has matured to the point where Buying is eminent.
So, with that in hand ...
Specific Company - Buy and Regular ETF - Buy - Recommendations will be provided rather soon, just like in my April 8th Update / Recommendations.
For me, going through the Analytics to Identifying C4Bs (Candidates for Buying) as well as C4Ss (Candidates for Shorting) - it is most important to look at the Big Three - the Fundamentals, the Consensus and the Technical. Long or Short the analytic work is the same - however, that's not quite true - it's really more work, time and effort to prepare for taking Bearish Positions. It is kind of fun to be looking for (identifying) negative C4Ss from the bottom of the pit (with an up-side-down mind-set) rather than looking for (identifying) positive C4Bs from the top of the heap. That is, those Companies that appear to currently be positive and have the highest prospect for profit and a low to moderate risk. Either way (Bull or Bear) it's the old Risk / Reward Ratio!
My weighting of Fundamental Analysis, Consensus Analysis and Technical is: 45% -- 30% -- 25%. So, for example, when I anticipate that a Bullish Inflection Point is coming, my Analytics is obviously in a positive mind-set. And for a Bearish Inflection Point it is a negative mind-set. You might be interested to know that when anticipating and doing my analytic work for an anticipated Bearish Inflection Point my Fundamental Analytics still carries the highest weight and my Technical Work the lowest weight. Now that is something to ponder!
As for ETFs - well that is a bit different process of Analytics. My perspective of all ETFs is that they should clearly and historically track the Indices, Sector or Industry Groups for which they are labeled. The better ones do that very well. If I am anticipating a Bullish Inflection Point, which I am at this time, then identifying those (Regular) ETFs that are the strongest of those that I follow is my objective. The opposite is true if I am anticipating a Bearish Inflection Point, then it's (Inverse) ETFs that are the strongest of those that I follow. Again, something to ponder! Remember, one of my secrets for profitable investing is that my Rotation Model does an excellent job of telling me the Sectors, Industry Groups, Companies and ETFs that are currently the Strongest as well as which ones are the Weakest.
Many have asked - what is my Consensus Analysis? In a nutshell it is the analysis of what the Street thinks (composite financial analysts and the like). Their opinion of what is favorable and what is not favorable is well published. There are many sources for my Consensus Analysis. One of several that I use, for two or three reasons, being barchart.com. They use what they call a weighted alpha and each company in each industry group is rated - high to low. I treat it like Goldilocks and the 3 Bears approach - the top are too hot and bottom are too cold - so that leaves me with those in the middle can be identified as either Going-To for my Bullish C4Bs or Coming-From for my Bearish C4Ss. (please see my SHB Cycle for an understanding of my choice of words to describe what I do).
Anyhow and to further explain - many years ago I had the good fortune of having the Merrill Lynch (QRQ) Research express mailed to my offices. At one point, they were recommending a company within an industry that I was very familiar with. It was my opinion that their recommendation was not even in the league with a couple companies that I was favoring (of course that was according to ME and I was rather young). Well, I bought for myself and my Clients - MY CHOICEs - and they were all duds! The Merrill Lynch recommendation soured over 50%. That's when I learned the lesson and importance of - Consensus Analysis. At the time they (ML) had 5,000 stockbrokers touting their research and their recommendations. Yes, the public was being given less than the best companies but those companies often did well for just one reason - the power of their sales persons. Discouraging but true and I believe that it is a major reason that the financial industry is focused on sales from sales persons and not on objective analytics.
My favorite ad on TV, way back when and on the same subject was - Does Micky Like It? (the video is still available on youtube.com - try - http://www.youtube.com/watch?v=vYEXzx-TINc) Three brothers at the breakfast table being given - what I call a bowl of mush. The older guys were skeptical until the younger Micky ate his whole portion with a smile - "he likes it!"
I can tell you from both personal experience and many long studies, specifically on this subject -- if the Street and Financial Analysts do not like the Company - I'd suggest you avoid buying it. As a matter of fact, you might consider Shorting it - but only when the General Market appears to be Bearish!
Patience and Discipline - waiting for my list of Fundamental, Consensus and Technical - Conformations - is necessary and it works very well!
The Market is now (very possible) setting up for another meaningful but likely (short in duration) Rally!
This coming week or so, I will be looking for the necessary Conformations to take a number of Selective Bullish investment positions.
High Volatility may not currently be showing up on VIX - lately, but it is clearly - alive and well.
I'll Update these opinions and thoughts - promptly if Market Conditions change.
I would also like to share and remind you that , in each Posting -- while my mini - forecasts are ( over the years ) very accurate - there are many Variable Market Conditions ( going's on - stuff ) that can delay an anticipated Investment Opportunity - Long or Short. Unfortunately, given half of a chance, the dynamics of the current Marketplace will most often create a delay! But, sooner or later ...
And as a Note and Warning regarding my Sector / Industry Group - Rotation Work: Rotation is my essential key and is foundational to consistently profiting in this Marketplace. So, I strongly emphasize the above word - "Selective." Even within my " In Favor" Sectors and Industry Groups the component Companies are widely scattered on the Charts, and often appear to be heading in many different directions. Obviously, some of those "directions" are not good for your bottom line - even when you are within the correct part of my SHB Cycle!
If you would like to have:
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I maintain two other Blogs: I ) a Public Blog with information on why you may be losing money in the stock market; sectors and industry groups; and inflection points. II) a Personal / Private Blog focused on the Analytics of My Rotation Model and SHB Cycle and it also covers, my bi-weekly on going General Market Commentary and 3 General Market and 15 Industry Group Rotation Models integrated into my SHB Cycle. This Blog is Updated 2 - 3 times per week. I would be pleased to make both available to you should you choose to contact me.
Please understand that while I am sharing with you my stuff it is important to me to know a bit about you and your stuff. So, I ask you to share with me a little personal information and a little investment background with your goals and objectives, just to get acquainted. If you have interest in further exploring / evaluating my stuff, please send me an Email with this requested information. Time will tell if there is a fit with what I do and your investment needs and objectives.
As a retired businessman, financial analyst and asset manager I decided after about 5 years of retirement, in late 2007 to resumed my place in the business of providing professional asset management services and consulting services. My metaphor for explaining my purpose of these Blog services is: I believe that if you want someone to buy your Chicken Ranch, you have got to first give away quite a number of chickens. That's what I am doing, but only until I sell the Chicken Ranch! Comprenda?
Whatever the task to be accomplished, some people will do it better than others will, and so it is with the investment of capital for income and/or growth.
To profit is glorious. To profit by Investing Wisely is divine!
Thank you for your time in reading my stuff and interest in my work.
Smile, have Fun - Investing Wisely,