Sector Analysis

Analysis showing which S&P sector ETFs are performing and which are not.

Symbol	Name	Short to medium term price analysis
xly	Cyclical	Showing upward strength. Looks O.K
xlk	Technology	Price action getting ready for a short term bottom.
xli	Industrial	Showing upward strength. Looks O.K
xlb	Material	Showing upward strength. Looks O.K
xle	Energy	Upward momentum strong. Maybe temporarily extended.
xlp	Consumer Staples	Price action bad. Loosing upward momentum.
xlv	Health	Upward momentum strong. Setting up for a short term bottom.
xlu	Utilities	Price action bad. Loosing upward momentum.
xlf	Financial	Upward momentum strong. Setting up for a short term bottom.

Growth vs Value Re-Balance

gazingstocks; growth vs value; growth; value

When the blue line is going up, growth stocks are working. When it is going down value stocks are working.

Re-balance your portfolio when the green line goes above 50 and then goes below it.

Or when the green line goes below -50 and then goes above -30. There is an orange line at -30 to show the transition. The +50 and -50 on the green line are extreme zones indicating a transition. No need to re-balance if the difference between the position weights from the desired weight is less than 1%. This will reduce unnecessary transactions.

This chart will be published weekly on the "charts" tab. The reader can use this to decide if they want to re-balance their portfolio between growth and value holdings. Rather than re-balancing based on an arbitrary time cycle, this method should give more precision in re-balancing the portfolio.

Note: If you are unable to see the chart on IE, you need to view the site on google chrome, Safari or Firefox.

S&P500 Index forming a 9 month base

On a short and medium term the market is in an uptrend. On a long term time frame the S&P500 index is forming a 9 month base. If it breaks out of the base it will indicate an uptrend in the long term also. S&P500 (SPY) is showing more strength than the Nasdaq Index (QQQ). This is because the energy stocks which are part of the S&P500 index have moved up in the last few weeks. There are no energy stocks in the QQQ ETF.

How should an investor allocate their assets in the current environment?

A prudent approach is to put 70% of the assets in stock ETFs (value and growth) and 30% in cash. On a short to medium time frame the market does look extended, that is the reason to have some cash in hand. The earning season is also starting and depending on how the company earnings come out, will guide us on what to do with the cash component of the assets.