Frequent oscillation between bullishness and bearishness produces challenging conditions

Continuing the behavior seen throughout 2015, institutional sentiment abruptly reversed again last week, from negative to positive. This frequent oscillation between bullishness and bearishness produces the most challenging conditions in which to earn high annual returns – as our significant profits from productive trades suffer offset from an above average number of small losses on frequent reversals.

Adding to these challenging conditions was another week which saw a few more “explosions” and “implosions” – abrupt, significant price adjustments arising from news-driven events that caught otherwise well-informed institutional investors completely by surprise. Most of those incidents last week were detrimental, but none occurred among Level 1 stocks.

Despite tough conditions, we are still far outperforming passive investors. Compare the number of current double-digit gains in the list below, plus all previously closed productive trades, with the return for buy-and-hold investors of only +2.1%, as measured by the benchmark S&P500 Index 31 weeks into the year.

Highlights: Only 3 new weekly highs in recent positions. Long double-digit gains in AKAO +13% and CARA +88% in just 6 weeks – those of you with this single position have out-earned passive investors by 40 times. In 6 weeks.

9 new weekly lows despite rising sentiments. Double-digit short gains in BAS +27%, CVTI +25%, ECA +39%, ERF +31%, PDS +24%, SEAS +17%, SFUN +12%, TKMR +15% and VICR +27%. Locking in a gain of +13.6% in PDFS.

Stock list changes: For those of you holding a short position in TKMR – look for your position under Arbutus Biopharma (ABUS) beginning this week as TKMR has merged with another company and the combined entity undergoes a name change.

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