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Current Signal Performance
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Turbo Signal
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Trade Date
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Turbo Model Returns (Long & Short Strategy)
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Nasdaq 100
(QQQ)
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Russell 2000
(IWM)
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S&P 500
(SPY)
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Classic Signal
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Trade Date
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Classic Model Returns (Long & Short Strategy)
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World
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Nasdaq 100
(QQQ)
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Russell 2000
(IWM)
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S&P 500
(SPY)
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U.S. markets kicked off the year catching up to a new year's rally in global stocks. A surprisingly positive construction report both in the U.S. and China threw a strong gust of wind in the sails of industrials and other cyclical stocks. Financials were strong on the heels of supportive showings in European markets. For the day, the indexes added around 1.5%, though doubters would note that most indexes failed to build upon their gaps at the market open and riskier small and mid-cap shares notably lagged their big-name brethren on the day. Action remained muted throughout Wednesday's session. Stocks traded in a tight range, the dollar rebounded, but no clear signals emerged from the effort. Thursday encapsulated well the current state of affairs. A weak showing in Europe led to a poor open for U.S. stocks. However, the best private employment report in over a year continued the theme of a U.S. economy that is potentially gaining strength. Domestic investors bought the opening dip, running stocks up through the day to a modestly positive finish for most indexes with the Nasdaq Composite
and banks showing particular strength. Friday brought a better-than-expected employment report to once again give domestic stocks a boost after a lagging overseas session led to a weak open. Large-cap tech stocks remained relatively strong leading the Nasdaq Composite to a positive finish while other indexes showed fractional losses for the day.
The S&P 500 (SPY)
ended the short week right where it opened, up +1.76%. The Russell 2000 (IWM)
followed suit adding +1.41%. The Nasdaq 100 (QQQ)
showed much better posting a +3.55% gain to begin 2012 trading. The Russell 2000 is wrestling with its simple 200-day moving average overhead, while the Nasdaq 100 and S&P 500 are clear of this mark. This week's action also brought "golden" crosses to many indexes where the 50-day moves back up through the 200-day, an indication of a positive trend.
The first week of our current World portfolio grouping delivered a +1.98% benefit. This portfolio is comprised of the top 5 members of our World Ranking from the December 30th ranking.
Both Classic and Turbo Models remain on Buy signals.
2011 gets reviewed
In reading through the 2010 year-end review, we were struck
by the comments around markets in November and December 2010. Particularly
in November, municipal bonds sold off hard as Congress failed to
extend the Build America Bond program at the same time as the Fed
unveiled another round of quantitative easing. The view at the time
was that this was the Fed's last gasp, their final effort to drive
rates down. The view on the muni bonds being that the removal of
the Build America Bond channel would put upward pressure on rates
for future municipal bonds, not to mention that investors were skittish
about municipalities defaulting on their bond contracts. These market
herd opinions prevailing late in 2010 set the stage for the best
performing asset class of 2011.
Forward a month or so into early 2011, widely quoted bond manager
Bill Gross lays down his view that U.S. Treasury bonds are old news,
their bull run over, and Bill is getting off the train. That bet
would prove to be a damaging one for Mr. Gross as U.S. Treasury
bonds would take this broadly negative sentiment to build a tremendous
rally leading long-term Treasuries to be the best performing asset
of 2011. For anyone watching the 2008 financial crisis drama unfold,
this flight to safe U.S. Treasuries had a similar feel to that crisis
ratcheting up step-by-painful-step. European leaders talked alot,
but did rather little, leading investors to fear that the debt notes
of financially-challenged Greece, then Italy, would plummet in value
as yields soared. These fears coalesced into a vicious selloff in
early August with the Dow Jones Industrial Average giving up 1000
points over three days. Furthering investor angst was a turn downward
in readings on the U.S. economy, sparking concerns of another recession
while we still wrestle with the immense damage from the last go-round.
Those particular concerns, however, quickly abated. Late September
brought an improvement in economic readings, domestically, resulting
in a double-digit move upward for stocks in the month of October.
Stocks jerked between the weak Euro, better domestic economy narratives
for the remainder of the year, but made little further progress.
Thus, a year that began with notions that the Fed was out of the
game and rising inflation a major concern ended with the Fed having
delivered investors another lesson in "don't fight the Fed"
as U.S. Treasury rates dropped significantly further while stocks
ended up with a rather blah year.
Chart 1: Classic struggles to
find a profitable trend in
2011
(results shown on QQQ
)
The lack of performance for stocks year-over-year belies the very
winding road investors took to get there. Volatility was at an absolute
high with the number of days having >2% swings reaching historic
proportions. Of course these days rarely went the same direction
for any length of time. That whipsawing market behavior produced
a nightmare for trend-following investors. One trend-following money
manager noted that the S&P's
200-day moving average was dead
flat through the latter part of 2011, confirming the complete lack
of trend in the market. Investors Business Daily, whose momentum/growth
stock focus requires a healthy market backdrop with at least a hint
of positive trend, wrote at year-end that 2011 had been a bear market
year beginning in February. While bull nor bear designations matter
much to our unemotional models, the lack of trend does matter. Our
Classic Model was frustrated time and again trying to discern an
intermediate trend to successfully ride. The result was a maddening
series of losing trades as shown in Chart 1.
A lack of trend did not mean a lack of market action, of course;
far from it! Anticipating Classic's difficulties with the increasing
market volatility of the past few years, we launched a more sensitive
and active trading model during 2011. Our more sensitive and active
Turbo Model appears to be more in line with what this indecisive
market is bringing. The current version of Turbo has been a winner,
posting a 50%+ return on the SPY for 2011 overall.
Chart 2: Turbo offers more active traders a way to dodge
the market's potholes
We turn the corner into 2012 with two Buy signals, a market that
is trying in this first week of the year to find some positive footing
and justify our Model's upward bias, but one that thus far keeps
encountering those same pesky Eurodebt woes. Just as in 2011, most
mainstream pundits will likely be wrong about what is to come. We
have now two very different Models to offer light to our investing
path, with more tools to come during the year. We appreciate you
sharing the journey with us and strongly believe 2012 will launch
TimingCube to a renaissance of investing success for our subscribers.
Question: Why do you hide certain information when I download
signal results?
Subscribers and those kicking the tires of our Model performance
are often frustrated by a quirk in the download of our results.
We try very hard to be completely transparent in our information,
disclosing the full history of our Models. The frustration (and
fix) are shown below:
Step 1: Download signal returns by going to our 'Results' tab and
clicking on 'Signal Returns' from the menu on the page. This will
bring you down to the bottom of the page where you will see a button
to 'Download File'. Clicking this button brings a question whether
to Open or Save the file. Opening the file takes you to step 2.
Step 2: Opening the signal return file gives you something like
this:
Chart 3: The worksheet showing the signal return detail
Step 3: The crosshatch in some of the Trade Date fields shown in
the red box above is a problem with the download. To fix this problem,
grab the line next to the column heading and drag it to the right
to "open" it up (the red arrow below shows where to put
your cursor, click, hold, and drag it to the right). You will see
the crosshatch magically disappear as shown:
Chart 4: Expand the Trade Date column to see all the data
within
We hope that helps you get a clean worksheet from the download.
If you continue to encounter troubles, send a note to support@timingcube.com
and one of our helpful customer service people will work with you
to address your specific problem.
Warm wishes and until next week.
The TimingCube
Staff
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Turbo Model
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Classic Model
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