Dynamic Growth ETF Portfolio
NEW BUYS:
None
NEW SELLS:
None
SWITCHES:
To Honorable Mention:
DND: Wisdom Tree Pacific Ex-Japan Total Dividend- .466
To Top 10 from HM:
OIH: Oil Services HOLDRS- .487
Here are our Top 10 ETF's for the week of October 15th:
1) FXI- iShares FTSE/Xinhua China 25- .747
2) PGJ: PS Golden Dragon China Fund- .698
3) EEB: Claymore ETF BNY BRIC- .583
4) ITA- iShares DJ Aerospace & Defense-.575
5) EWS: iShares MSCI Singapore (Free) Index Fund-.574
6) IXP: Telecommunications Sector Index Fund- .553
7) IAH- Internet Architecture HOLDRs Trust-.551
8) PPA- PS Aerospace & Defense- .531
9) IHI- DJ Medical Devices- .498
10) OIH: Oil Services HOLDRS- .487
Honorable Mentions:
DND: Wisdom Tree Pacific Ex-Japan Total Dividend- .466
EWM: MSCI Malaysia (Free) Index- .469
The Week in Review:
"Something just doesn't feel right". This is a comment I heard this weekend from a business owner who has his fingers on the pulse of many consumers.
Boy, I'll say something doesn't feel right!
I have been saying for quite sometime that reports we have been receiving about the economy are so out of whack with reality that we can not rely on their validity anymore.
Of course I am talking about the inflation numbers (CPI & PPI), and the jobs data (jobs for waitresses and bartenders up, while manufacturing disappears overseas).
What is very unfortunate is people who have lost their jobs due to outsourcing are accused of being "protectionist" or "isolationist".
I guess these are words that are designed to ward off criticism of the North American Free Trade Agreement (NAFTA), and the Dominican Republic-Central America Free Trade Agreement (CAFTA) in 2006. In reality, Americans don't mind a free trade policy as long as there is a quit pro quo. Unfortunately, there is not.
See, most Americans will give just about anything a chance when it comes to a policy change as long as they get something in return. Unfortunately again, they are getting nothing in return.
As an investment advisor, I like to sit back and gather as much information as I can in order to see the big picture.
Gathering and reporting data strictly from a macro prospective is very little help in predicting future trends. Since macro data tells you what has happened, I like to look at the economy through a human perspective. This gives us the true economic picture.
Last week retail sales for September showed an increase in spending, but this was due to the higher costs for energy.
The Markets
Once again, bad news in the financial sector is being looked at through rose-colored glasses. Companies like Citigroup, UBS, Merrill Lynch, and Washington Mutual announce massive losses through multibillion-dollar write-downs, and their stocks rally.
Despite all of the negative news, the stock market continues to climb the proverbial "Wall of Worry".
Its clear that "real" inflation is out of control. The CRB Index which measures the prices of various commodities closed at 446.44, up from 442.73 last week.
Crude oil prices surged again last week to close at $82.74, up from $80.62/bbl the week before.
OPEC on Monday raised its forecast for demand for its oil this winter and said it appeared more likely that the United States would avoid a sharp economic slowdown. China imported 3.35 million b/d of crude in September, up 1.5% from 3.29 million b/d in the same month last year, according to preliminary trade figures released October 12
Gold closed at $753.80/oz up from $747.4/oz. last week.
Oddly, the stock markets recent advance is being lead by stocks that normally rally during bear markets.
The stocks and sectors that fared the best during past bear markets were as follows;
1946- Oil & Gas
1957- Pharmaceuticals, food and Tobacco
1962- Gold
1969-1970- Coal and Auto Parts
1973-1974- Gold, Sugar, Steel, and Fertilizer
2000- Gold
On the bright side, the plunge in the US Dollar is helping to push the trade deficit lower. Talk about viewing the worst through rose-colored glasses. When one considers a crash in their nation’s currency as something good, what does that tell you?
U.S. Dollar Index dropped again last week to 78.16 down from 78.24 the week before.
If you are contrarian, you might want to consider playing the opposite side the fall in the US Dollar. My instincts are telling me a major rally is due since so many investors are on the bearish side of the US Dollar trade.
The play here is to buy the PowerShares DB US Dollar Index Bullish Fund (UUP).
Relative Strength Index (RSI)- Stocks Oversold/ Overbought
The RSI indicator (below 30) is a good source of finding stocks that are over-sold and due for a rally, as well as stocks that are over-bought (over 70) and due for a decline.
Here are a couple of oversold stocks to consider-RSI Stock Blog
For now, we will continue to ride the markets new life a little longer before taking profits.
Our current asset allocation is as follows;
70% Equities: (Normally 95%) Aggressive
60% Equities: (Normally 80%) Moderately Aggressive
50% Equities: (Normally 60%) Moderate
30% Equities: (Normally 40%) Moderately Conservative
15% Equities: (Normally 20%) Conservative
At Dow 14,500, S&P 1575, we will reduce our allocation models by 5% to;
65% Equities: (Normally 95%) Aggressive
55% Equities: (Normally 80%) Moderately Aggressive
45% Equities: (Normally 60%) Moderate
25% Equities: (Normally 40%) Moderately Conservative
10% Equities: (Normally 20%) Conservative
