08/19/2012 Mousetrap

[Timothy Clontz]

Small Portfolio XLF & IAU 10.60%

Position Date Return Days
VG 10/27/2011 -34.65% 297
BT 1/4/2012 13.29% 228
SAI 5/30/2012 9.12% 81
XEC 6/5/2012 22.59% 75
DECK 6/15/2012 5.79% 65
CVX 7/5/2012 5.76% 45
RIMM 7/16/2012 3.03% 34
UEIC 7/30/2012 22.38% 20
QSII 8/6/2012 11.55% 13
CECO 8/9/2012 -4.86% 10

S&P Annualized 4.44%
Small Portfolio Annualized 8.68%
Large Portfolio Annualized 18.71%

From: http://market-mousetrap.blogspot.com/2012/08/08192012-up-up-and-away.html
No rotation tomorrow, but there will be one by next Monday (at the latest).
Behind the scenes, mining and railroad stocks continue to accumulate money-flow, and the next rotation may pick one of those stocks.
The combination of those two industries points to another liquidity rally, but I seriously doubt that it will happen. Sometimes the big players are wrong. The only true protection for those times when technicals fail is a solid long term fundamental basis for the stocks in our portfolio.
Of the ten worst industries on my model, four of them are in the utilities sector, and indeed on my sector model XLU is now the weakest sector. These also point to a break out to new highs on the S&P – PREDICATED on central bank liquidity. The smart money is betting on QE3. As I said, sometimes the smart money is wrong.
In the long run, the market goes up. In the short run, well… we can enjoy the ride while it lasts.
But the day it becomes obvious uncle Ben isn’t pouring any more syrup on our flapjacks, watch out.
Tim

[Timothy Clontz]

Small Portfolio XLF & IAU 11.65%

Position Date Return Days
VG 10/27/2011 -35.87% 300
BT 1/4/2012 13.06% 231
SAI 5/30/2012 7.84% 84
XEC 6/5/2012 20.36% 78
DECK 6/15/2012 6.71% 68
CVX 7/5/2012 5.13% 48
RIMM 7/16/2012 -1.24% 37
UEIC 7/30/2012 22.92% 23
QSII 8/6/2012 7.21% 16
CECO 8/9/2012 1.08% 13

S&P Annualized 4.11%
Small Portfolio Annualized 9.48%
Large Portfolio Annualized 17.93%

From: http://market-mousetrap.blogspot.com/2012/08/08222012-selling-ceco-buying-fcx-again.html
Rotation: selling CECO; buying FCX
The industry rotations are about as chaotic as anything I’ve seen since I began this model 15 months ago. FCX was a buy, then 10 days later a sell. CECO was a buy, then 10 days later a sell. This is not normal at all.
What’s happening here is that CECO is in an economically defensive industry and FCX in a bullish liquidity driven industry. As such they are both extremely sensitive to money flow betting between a deflationary spiral (favoring education) or an inflationary surge (favoring mining).
Personally, I don’t think any rational person can claim to know the answer here – perhaps not even uncle Ben Bernanke himself.
All we can do is follow the money as it chases its own tail.
As always, if FCX and CECO gap away from each other, that would prevent the trade.
Tim

[Timothy Clontz]

Yesterday's substantial gap at the open between CECO and FCX cancelled the trade.

The trade is now set to sell SAI and to buy SWM.

As always, a negative gap would cancel this trade as well. The model holds each stock from 1 to 2 quarters on average. No need to chase anything. Let it come to us.