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.

Market Outlook

Long Term trend on the stock Market is not up.

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Buy Signals:

QQQ on 8/3/2012

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Sell Signals:

SPY on 1/29/2016

DIA on 1/29/2016

IWM on 9/30/2015

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Short term in whipsaw mode, but long term uptrend intact

The monthly oscillator is showing strength and monthly prices are in an uptrend.

The oscillator on the weekly chart is showing a lukewarm uptrend. The prices are still in a basing mode.

On a short term basis (daily prices) the oscillator is weak and the prices are basing. However the prices have not cut the prior low.

The possibilities are as follows:

1.                The prices undercut the prior low next week then we are in a short term downtrend.

2.               The prices do not undercut the prior low next week and move up. Then we are continuing our basing or consolidation of daily prices.

So we repeat what we said last week, stay fully invested for the long term. For the medium to short term do not add any new positions and aggressively sell your weaker holdings.

Watch the video:

Short term in downtrend but long term uptrend intact

The monthly oscillator and prices are in an uptrend, so the long term uptrend of the market is intact.

On a short term basis (daily prices) at the recent high of the oscillator the prices did not make a new high. Now the oscillator is at the low end and has not turned up yet. However the prices have not cut the prior low either.

The possibilities are as follows:

1. The prices undercut the prior low next week then we are in a short term downtrend.
2. The prices do not undercut the prior low next week and move up. Then we are continuing our basing or consolidation of daily prices.

So stay fully invested for the long term. For the medium to short term do not add any new positions and aggressively sell your weaker holdings.



Watch the video and see the analysis: