Gloom & Doom and Why We’re Still Looking Good

SYNOPSIS
We’ve clearly had the worst week of 2015 last week with all major indexes taking a one-week decline of 5-7%. Nothing was untouched in the rush to the exits. This is going out Monday after the close, and the situation is horribly worse than what you’ll see in our weekly charts based on last Friday’s close, and the discussion around those.

ProfiTrend Portfolio… The annualized growth rate for the ProfiTrend Portfolio is now at +162%. That’s down from 226% the previous week, but you can obviously see how well our holdings are performing relative to the S&P 500 Index and S&P/TSX Composite Index.
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PTA Commentary… Gloom & Doom and Why We’re Still Looking Good
Our commentary this week is brief. We do a short walk-through to remind you why our PTP portfolio (and hopefully yours too, if you’ve been following our lead) hasn’t been hit too badly, while those around us in the “buy/hold” camp are once again praying and deluding themselves into believing that in “the long run” they’ll find salvation. We don’t claim to have a crystal ball to foresee when major sharp declines will occur, but we do nag you regularly when the odds are mostly against you when buying new long positions. That’s also an invitation to take the more profitable short side.

The Importance of Tracking Market Breadth

SYNOPSIS
There was a modest improvement in the North American equities investment landscape last week, but nothing to write home about. The S&P 500 and DJI gained a little over half a percentage point, while the one-week returns were practically zero to negative for all other indexes in our set. All trend values are negative, with the exception of the S&P 500, which is poised at exactly zero.

ProfiTrend Portfolio… The annualized growth rate for the ProfiTrend Portfolio is now at +226%, up from 143% last time. It may seem staggering that we can be doing so well under current market conditions, but there are some good reasons that will become apparent in the body of this week’s TrendWatch Weekly. Dropping losers and hanging onto winners is always key, but a few short positions can’t hurt either under these circumstances.

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PTA Commentary… The Importance of Tracking Market Breadth
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If you think that “bad breadth” is a really awful pun, you’re in good company. This pun, however, has been around at least since the early 1900s. Bad breadth is at least as important as real bad breath, believe me. The even more important issue is that market breadth is all too often ignored nowadays. As it turns out, this is a perfect time to talk about it, because breadth sucks right now… and has since April/May. So check out our coverage on what market breadth is, how it’s measured and how you should adjust your investment behaviour accordingly.

Smart Money… The latest State Street Investor Confidence Index results for July were released last week, and as usual we post the results every week until the next monthly update. The Global ICI decreased to 114.6, down 12.5 points from June’s revised reading of 127.1. Confidence among North American investors decreased with the North American ICI falling 20.6 points to 122.6, down from June’s revised reading of 143.2. Meanwhile, the Asia ICI rose by 2.6 points to 89.5 while the European ICI fell 2.1 points to 100.4. In short, in spite of declines, equities are still favoured over lower risk investments except in Asia. The results for August will be revealed on August 25.

Featured Video… The 81 parts of Google
We normally don’t single out individual companies, when picking a video to feature, but this one is nicely done. As Google is restructuring under the umbrella Alphabet name, tech investors in particular might want to learn more about everything that Google is up to. It’s way more than search and ads nowadays. Scan the 81 separate ventures that are now part of the package. The video is embedded in the full version of TrendWatch Weekly, but you can also link to it here.

Gold, Oil & the Dancing Dollar!

SYNOPSIS
It’s still gloom-and-doom as far as we’re concerned, although you’d never know it if you’re a regular business TV viewer. The majority of both Canadian and US stocks have been trending lower since mid-May, as you regular readers will know by now. There are always a few exceptions in a few still-improving market sectors that are still climbing, but for how much longer?

ProfiTrend Portfolio… The annualized growth rate for the ProfiTrend Portfolio is now at +143%, up from 123% last time. In spite of horrifically weak broad market conditions, we’re still well ahead of the benchmark indexes.

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PTA Research… Gold, Oil & the Dancing Dollar!

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If anything is weighing heavily on the Canadian stock market, it’s the declining prices of commodities across the board for well over a year now… gold and oil in particular. This week we once again use the “relative” in relative trend analysis™ (RTA) to put these events in perspective. We thoroughly examine how gold and crude oil have been performing relative to the broad Commodity Research Bureau Index (CRB), and also to the all-important US dollar (USD). There are a few surprises along the way, and of course we draw out the implications for investors.

Smart Money… The latest State Street Investor Confidence Index results for July were released last week, and as usual we post the results every week until the next monthly update. The Global ICI decreased to 114.6, down 12.5 points from June’s revised reading of 127.1. Confidence among North American investors decreased with the North American ICI falling 20.6 points to 122.6, down from June’s revised reading of 143.2. Meanwhile, the Asia ICI rose by 2.6 points to 89.5 while the European ICI fell 2.1 points to 100.4. In short, in spite of declines, equities are still favoured over lower risk investments except in Asia. The results for August will be revealed on August 25.

Seasonality… Generally speaking, August is not a great month for appreciation in the equities markets. Of the 12 months it ranks 10th with the S&P 500, 10th with the DJI, 11th with Nasdaq and 10th with the S&P/TSX Composite Index. Even among the 10 GICS sectors that we track, only Utilities tend to show modest gains in August. Utilities outperform the S&P 500 63% of the time in August.

Featured Video… Farewell to John Stewart & The Daily Show
For 16 years Jon Stewart has been a critic and a conscience for everything that’s wrong about America. His platform was The Daily Show… a 3-4 night per week comedy/satire vehicle that he made famous. The last episode (with him as host) aired last Thursday. Bloomberg TV managed to pull out some highlights from his many critiques of Wall St. over the years. We have them in a two-minute video clip in the newsletter.

Summer Doldrums Continue

SYNOPSIS

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Conditions are still bearish, but in a lazy, summer doldrums kind of way. There was a modest rebound last week; and for a change, the S&P/TSX Composite Index gained more on a one-week basis than the other major indexes we chart. Nasdaq continues to lead on a trend basis, although 0.2%/week is nothing to write home about.

ProfiTrend Portfolio… The annualized growth rate for the ProfiTrend Portfolio is now at +123%, up from 109% last time. In spite of horrifically weak broad market conditions, we’re still well ahead of the benchmark indexes. And, in case you’re wondering, we only have one short position, and that one has turned against us.
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Smart Money… The latest State Street Investor Confidence Index results for July were released last week, and as usual we post the results every week until the next monthly update. The Global ICI decreased to 114.6, down 12.5 points from June’s revised reading of 127.1. Confidence among North American investors decreased with the North American ICI falling 20.6 points to 122.6, down from June’s revised reading of 143.2. Meanwhile, the Asia ICI rose by 2.6 points to 89.5 while the European ICI fell 2.1 points to 100.4. In short, in spite of declines, equities are still favoured over lower risk investments except in Asia. The results for August will be revealed on August 25.

Seasonality… Generally speaking, August is not a great month for appreciation in the equities markets. Of the 12 months it ranks 10th with the S&P 500, 10th with the DJI, 11th with Nasdaq and 10th with the S&P/TSX Composite Index. Even among the 10 GICS sectors that we track, only Utilities tend to show modest gains in August. Utilities outperform the S&P 500 63% of the time in August.

Featured Video… What’s happening with commodities?
Even if you prefer not to invest in commodities per se via futures contracts, ETPs, etc., at one time or another you’ll be tempted to buy some of the stocks that produce commodities. In Canada that’s a large proportion of all the stocks listed on Canadian exchanges. And, while the overall percentage is lower in the US, the Materials equities sector can’t be ignored either. So check out this brief but informative video on the state of commodities right now. The video is embedded in the full newsletter, or you can find it by following this link.