Transports Try To Prod Bulls Ever Forward [View article]
I employ the US sector iShares rather than Sector SPDRS primarily for two reasons. First, iShares divides the equity universe into 10 sectors rather than 9, with Technology and Telecom separated, which I prefer. And second, the number and diversity of constitutents in each ETF is greater, which gives me more choices when drilling down to the top- or bottom-ranked stocks within each. Sector SPDRs are subsets of the S&P 500 large cap index, while sector iShares track the various Dow Jones US industry indexes, which include companies with lower capitalizations.
Transports Try To Prod Bulls Ever Forward [View article]
AAPL looks like a good bet within Sabrient's various quant models. It carries an Outlook score of 94, Value 96, Growth 92, and Earnings Quality 82. Only its Momentum score is low at 36 (no surprise).
FFIV also looks good with an Outlook score of 70, Value 70, Growth 93, Momentum 12, and Earnings Quality 96.
On the other hand, NEM carries much lower scores, including an Outlook score of 56, Value 73, Growth 25, Momentum 9, and Earnings Quality 17. Not quite as good.
Bulls Seek New Blood To Boost Conviction [View article]
JJC is an exchange-traded note (ETN) tied to copper futures contracts, and as such it is not included in Sabrient's SectorCast rankings, which creates bottom-up aggregate profiles of ETFs based on the underlying equity scores. What I can say is that from a chart perspective, JJC has fallen hard this month and today it is threatening to close below its 200-day simple moving average. On the other hand, its oscillators have become oversold and price should be getting ready to at least stabilize and perhaps bounce back. Whether it's only a dead cat bounce remains to be seen. From a fundamental perspective, the iShares Basic Materials ETF (IYM), which includes copper miners, continues to rank low in the Sabrient rankings, primarily driven by modest low-term growth projections and net downgrades from the Wall Street analyst community.
Healthcare And Utilities Are The Current Safe Havens [View article]
Thanks, La Marque, for the kind words. I invite you to sign up for email delivery of my weekly article through the Sabrient.com web site ... and tell your friends!
Sector Rankings Stay Neutral While Charts Take A Bullish Turn [View article]
Thanks for your interest, Eric. Sabrient's fundamentals-based Outlook rank went live in March 2008 after extensive testing and development showed that it had an outstanding ability to layer predicted performance over an entire universe of stocks (not just the tails, as is typical for most multifactor filters). Because of this, we felt it was our best model to use for aggregrating scores of individual stocks to create bottom-up profiles of stock baskets, such as sectors, industries, and ETFs. Testing at that time showed a top-2 minus bottom-2 sector performance spread of roughly 12% per year.
The Outlook rank continued to perform exceptionally well through much of 2010, but during 2011 it began to be impacted (like most quant models) by the inordinately high correlations among equities (perhaps driven by the big macro events leading to asset allocation swings at the expense of traditional stock-picking). Implied correlations approached 85% in the fall of 2011. This "risk-on/risk-off" behavior often led to "junk stocks" outperforming. Because the Outlook rank generally rewards higher-quality GARP stocks with conservative accounting practices, its performance lagged in such an environment.
Nevertheless, quality eventually rises to the top. As equity correlations have receded, the performance of the fundamentals-based Outlook model has shown signs over recent months that it is returning to its former glory.
Sector Detector: U.S. Stocks Still The Place To Be For Global Investors [View article]
Ray, the last section of my article talks about one approach to a sector rotation strategy using ETFs based upon Sabrient's fundamentals-based SectorCast model. An "enhanced" sector rotation version would take the additional step of trading the highest ranked stocks within the highest ranked sectors (rather than the ETFs), and perhaps employing options (both for leverage and for limiting risk). Finally, if one is open to more frequent trading and position monitoring, one could use the rankings to create a watchlist and then use a technical overlay for entry/exits.
Insider Sentiment ETF Shows More Promise Than Insider Selling Data [View article]
Although Guggenheim chooses to categorize NFO as a mid-cap blend fund, in fact the underlying Sabrient Insider Sentiment Index (SBRIN) is really an all-cap index that selects stocks from across a broad eligible universe. Current holdings include Apple (AAPL). So, a more appropriate benchmark for comparison is the iShares Russell 3000 Index Fund (IWV), which NFO has outperformed by closer to 30%.
Bulls Are Thankful For An Entry Point [View article]
Thanks for all your good and challenging comments. To me, bulls are those accumulating long positions and bears are those accumulating short positions or distributing/liquidating long positions. The intraday traders are merely providing liquidity. With this combination of low volume and low volatility, the accumulators of longs have been creeping the market higher, mostly unchallenged YTD, but I believe we'll need to see increased volume coupled with a thrust off of short-term oversold technicals to push through current resistance levels.
I don't have a TV at the office, so I don't know what the TV personalities have to say. I scan a host of blogs for independent insights and thought-provoking ideas. I do read some mainstream end-of-day market summaries to learn what they say are the consensus "drivers of the day." In any case, I believe that fundamentals drive the market in the longer-term and technicals drive it shorter-term. That's why the market will often shrug off bad news quickly when the chart says it "wants" to rally.
So long as the world remains awash in fiat currency, U.S. stock market fundamentals on balance look pretty good. The commentators can always come up with a reason-of-the-day for market behavior, when in fact the market simply has been in rally mode in which only a major external event could stop it.
But again, we now find it trying to test resistance yet again, and I just don't know if there is enough power right now to push through. That doesn't necessarily imply that a massive selloff is in store, with bulls deciding its time to give up on any chance of further gains and protect profits. But a stronger test of conviction might be needed to attract more cash at these levels.
I can appreciate the view that the market (and the economy) has become a house-of-cards due to collapse. Such massive manipulation of the free market just seems wrong. It might well turn out that we have chosen to avoid enduring a little discomfort now in exchange for severe pain in the future. No, the eventual unwinding of the balance sheets probably won't be pretty. I just don't see any indications that such a scenario is imminent.
Sector Detector: Financials And Materials Take The Heat [View article]
Bull and Bear scores can give a quite different perspective than beta. Bull and Bear only look at "key" market days of unusual strength or weakness over the prior 40 days. Beta measures a stock's price volatility on average relative to the overall market, both up and down, whereas Bull and Bear give a perspective on up-market behavior separate from down-market behavior, and only on "key" days over the recent past.
For example, SYNA has a good combination of Bull and Bear (56 and 63) and its beta is 1.2. SLXP has has a good combination of Bull and Bear (60 and 57) and its beta is 0.8. PROJ has high Bull, low Bear (72, 20) and its beta is 1.1, while SANM also has high Bull, low Bear (77, 25) and its beta is 3.1.
You might think that the strongest correlation with beta would be in high Bear, low Bull, which would be indicative of a defensive, low-beta stock. For example, NAII (Bull 44, Bear 86) has a beta of 0.5. However, NETL (Bull 28, Bear 81) has a beta of 1.3.
Bull and Bear scores are simply Sabrient's unique way of identifying which stocks have been leading rallies and/or serving as safe havens over the recent past, with the expectation that such behavior might continue over the near term. Note that the Bear score is the basis for the Sabrient Defensive Equity Index (which is tracked by exchange-traded fund DEF).
If You Have Been Waiting For An Apple Entry Point, Wait No Longer [View article]
From a purely quant perspective in Sabrient's models, AAPL remains a StrongBuy with a perfect 100 Growth Score. It also boasts a 96 Momentum Score, which considers price, earnings, and group momentum factors. And it has a solid forensic accounting score (i.e., no red flags indicating questionable or "aggressive" practices -- no surprise given the tremendous cash position). From my personal perspective, my teenage daughters and every one of their friends own at least one Apple product -- usually several. Apple's innovation, branding, customer service, and customer loyalty are unsurpassed. I am still a PC & BlackBerry user myself, but I constantly feel the pressure from the Apple juggernaut.
Walter Energy Looks to Be Acquired. Should You Buy the Stock? [View article]
Sabrient's quant algorithms like WLT. It carries a StrongBuy rating with a Growth score of 90 and Momentum score (earnings, price, and group momo) of 98, along with a decent forward-looking Outlook score of 80. Our algos also like ARLP and BTU in the coal space. The top Value score goes to ANR, although it currently carries a Hold rating.
Synthetic ETF Considerations: No Cause for Concern [View article]
Given all of the mysterious practices that led to the financial crisis, it's no wonder that investment vehicles available to the public that employ terms like "swaps," "derivatives," and "counterparties" attract headlines and paranoia. Thanks for providing some helpful light on the subject.
Salesforce.com Has Defied Gravity for Too Long [View article]
CRM has been ranked at the bottom of Sabrient's proprietary Company Outlook rank, which is a forward-looking and quality-oriented rank that considers things like current & projected valuation, historical & projected growth, dynamics of Wall Street analysts’ consensus revisions, accounting/governance practices. It is also rated Strong Sell in our quant ratings algo. It is a short position in both the Sabrient Select Opportunity model portfolio and the Sabrient Investor's (H)Edge long/short model portfolio.
Good information and insights, including the comments. I just wanted to add that Sabrient's quantitative ratings algorithm sees CEPH as having a compelling valuation at current prices and maintains a Buy rating as a value pick. Value score is 94 (out of 100). Growth score is a mediocre 61. Forward-looking Outlook score -- which considers factors like current & projected P/E, analyst earnings changes, growth projections, and forensic accounting / corp governance -- is a strong 90, held back somewhat by its aggressive accounting score (as computed by Audit Integrity).
Although some of their forward-looking scores in the Sabrient quantitative ratings algorithm have improved, none of the homebuilders carry ratings better than Hold, with a number of Strong Sells. Low-ranked stocks in the group include RYL, PHM, MDC, and TOL. Because ITB is more of a pure play in the homebuilders (in contrast to what you say in your article), it has our lowest ETF rating of Least Attractive and a score of 6 (out of 100). XHB is more diversified with equal weightings across home supply & decor retailers as well as the homebuilders, so it is rated Less Attractive with a score of 26.
Transports Try To Prod Bulls Ever Forward [View article]
Transports Try To Prod Bulls Ever Forward [View article]
FFIV also looks good with an Outlook score of 70, Value 70, Growth 93, Momentum 12, and Earnings Quality 96.
On the other hand, NEM carries much lower scores, including an Outlook score of 56, Value 73, Growth 25, Momentum 9, and Earnings Quality 17. Not quite as good.
Bulls Seek New Blood To Boost Conviction [View article]
Healthcare And Utilities Are The Current Safe Havens [View article]
Sector Rankings Stay Neutral While Charts Take A Bullish Turn [View article]
The Outlook rank continued to perform exceptionally well through much of 2010, but during 2011 it began to be impacted (like most quant models) by the inordinately high correlations among equities (perhaps driven by the big macro events leading to asset allocation swings at the expense of traditional stock-picking). Implied correlations approached 85% in the fall of 2011. This "risk-on/risk-off" behavior often led to "junk stocks" outperforming. Because the Outlook rank generally rewards higher-quality GARP stocks with conservative accounting practices, its performance lagged in such an environment.
Nevertheless, quality eventually rises to the top. As equity correlations have receded, the performance of the fundamentals-based Outlook model has shown signs over recent months that it is returning to its former glory.
Sector Detector: U.S. Stocks Still The Place To Be For Global Investors [View article]
Insider Sentiment ETF Shows More Promise Than Insider Selling Data [View article]
Bulls Are Thankful For An Entry Point [View article]
I don't have a TV at the office, so I don't know what the TV personalities have to say. I scan a host of blogs for independent insights and thought-provoking ideas. I do read some mainstream end-of-day market summaries to learn what they say are the consensus "drivers of the day." In any case, I believe that fundamentals drive the market in the longer-term and technicals drive it shorter-term. That's why the market will often shrug off bad news quickly when the chart says it "wants" to rally.
So long as the world remains awash in fiat currency, U.S. stock market fundamentals on balance look pretty good. The commentators can always come up with a reason-of-the-day for market behavior, when in fact the market simply has been in rally mode in which only a major external event could stop it.
But again, we now find it trying to test resistance yet again, and I just don't know if there is enough power right now to push through. That doesn't necessarily imply that a massive selloff is in store, with bulls deciding its time to give up on any chance of further gains and protect profits. But a stronger test of conviction might be needed to attract more cash at these levels.
I can appreciate the view that the market (and the economy) has become a house-of-cards due to collapse. Such massive manipulation of the free market just seems wrong. It might well turn out that we have chosen to avoid enduring a little discomfort now in exchange for severe pain in the future. No, the eventual unwinding of the balance sheets probably won't be pretty. I just don't see any indications that such a scenario is imminent.
Sector Detector: Financials And Materials Take The Heat [View article]
For example, SYNA has a good combination of Bull and Bear (56 and 63) and its beta is 1.2. SLXP has has a good combination of Bull and Bear (60 and 57) and its beta is 0.8. PROJ has high Bull, low Bear (72, 20) and its beta is 1.1, while SANM also has high Bull, low Bear (77, 25) and its beta is 3.1.
You might think that the strongest correlation with beta would be in high Bear, low Bull, which would be indicative of a defensive, low-beta stock. For example, NAII (Bull 44, Bear 86) has a beta of 0.5. However, NETL (Bull 28, Bear 81) has a beta of 1.3.
Bull and Bear scores are simply Sabrient's unique way of identifying which stocks have been leading rallies and/or serving as safe havens over the recent past, with the expectation that such behavior might continue over the near term. Note that the Bear score is the basis for the Sabrient Defensive Equity Index (which is tracked by exchange-traded fund DEF).
If You Have Been Waiting For An Apple Entry Point, Wait No Longer [View article]
Walter Energy Looks to Be Acquired. Should You Buy the Stock? [View article]
Synthetic ETF Considerations: No Cause for Concern [View article]
Salesforce.com Has Defied Gravity for Too Long [View article]
Cephalon Is Worth Considering [View article]
Homebuilder ETFs Send Mixed Signals [View article]