Dynamic Growth: ETF Portfolio
NEW BUYS:
FXF: Currency Shares Swiss Franc Trust- .428
NEW SELLS:
PPA- PS Aerospace & Defense- .352
SWITCHES:
None
Here are our Top 10 ETF's for the week of January 7th:
1) SLX: Market Vectors Steel Index Fund- .590
2) OIH: Oil Services HOLDRS- .579
3) PZD: PowerShares Cleantech Portfolio- .476
4) PGJ: PS Golden Dragon China Fund- .464
5) ADRE: BLDRS Emerging Markets 50 ADS Index Fund- .450
6) VWO: Vanguard ETF Emerging Markets- .433
7) UTH: Utilities HOLDRs Trust- .430
8) FXF: Currency Shares Swiss Franc Trust- .428
9) EEB: Claymore ETF BNY BRIC- .387
10) FVL: First Trust Value Line (R) 100 Fund- .376
Notes:
Given the current market environment, we are being more nimble and less patient in regards to our top holdings. As you can see from our recent changes above, we bought the Swiss Franc Trust (FXF) because we feel the currency will strengthen, and sold Aerospace & Defense (PPA) because we are 11 months away from a potential political change in Washington.
As the old saying goes, when a Republican is in the White House, buy Oil and Defense stocks. When a Democrat is in the White House, sell Oil and Defense, and buy Technology.
As far as owning technology is concerned, I do not want to buy as the economy is losing strength. I think we will have ample opportunities to gain exposure to the sector latter in the year.
The Week in Review:
It's becoming clear that the 5 year bull cycle is coming to an end. Given the current oversold condition, I believe the market is due for bounce in the near term.
An oversold reflex bounce would give us a little wiggle room to reduce our asset allocation models by another 5%. On Friday, we trimmed 5% from our suggested models.
We are holding out hopes that the Dow can rally back to 13,500. With all eyes watching for hints of a potential recession, the Fed may come to the markets rescue after last weeks devastating payroll report.
On Friday, the Labor Department reported that seasonally adjusted non-farm payrolls rose by only 18,000 in December, well below the estimated 58,000 to 70,000 that many economists had expected. As a result, the unemployment rate rose 0.3%, from 4.7% to 5%. Historically, dating back to 1949, any time the unemployment rate has jumped 0.3% or more in a month, a recession has followed. This is what scared the market on Friday.
The 3-month Treasury bill currently sits around 3.1% while the Fed Funds rate is at 4.25%. The Fed does not like to fight market rates, and since it is already way out of line with market rates, the next cut many surprise the markets enough to ignite a huge short covering rally.
For the week:
-Gold closed at $859.83/oz +17.13 for the week. Last week gold closed at $842.70, and was also up from the price of $815.80 two weeks ago.
-The Commodities CRB Index closed at 366.22, up from 358.51 last week, and up from 354.23 two weeks ago. The index hit a new high last week. the previous high was 359.05 on November the 7th.
Wait a minute, aren't we are being told that inflation is low, or non-existent? If you want to see more propaganda, just tune into any daily news channel.
-Crude Oil closed at $99.33 /bbl up from $96.00 last week and up from $93.31 two weeks ago.
This is old news now, but adjusting for inflation oil traded at $100/bbl this week for the first time in history. This includes the highs set in the 1970s.
-The U.S. Dollar close at 75.82 down from 76.20 last week and down from 77.74 two weeks ago.
If the Dow rallies back to the 13,500 mark, we will reduce our asset allocation models by an additional 5%;
Our current asset allocation is as follows;
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
