Past week recap: The final week of 2016 proved very quiet. Year-end adjustments by funds were fewer than usual, as evidenced by very low trading volume. The stock market may have momentarily run out of buyers – investors either already bought in to the election rally weeks ago or decided they missed it and will wait to buy when prices retrace as they eventually do.
If there was follow-through buying by mutual funds last week it did not include many of our long positions, most of which slumped. Their last minute selling of downtrodden stocks, however, did benefit many of our short positions, for additional gains (be glad you are not one of many thousands of investors long stocks like AGEN, EVH, IVTY and NPTN with recent losses exceeding 25%). Once again, very few trades this weekend.
Passive investors are breathing a sigh of relief that they managed gains of around +9% on the year – on slow, incremental price rises throughout the year and certainly aided by the year-end rally – bettering the annual average of +4% posted by the three major market indexes over the past 15 years. Disciplined subscribers, however, should have earned in excess of +10% in just the past 9 weeks alone, not to mention all prior year gains in both directions, including large short gains that started off 2016.
For what it’s worth, history suggests our stock market often posts a decline during a new U.S. President’s first year in office. Remember that 2016 started off with a significant month-long decline, and major indexes declined last week, so there is a possibility the election rally is coming to a close.
Predictions are pointless, however. Instead, we will continue to react on a weekly basis to stock-specific trends . . . discerned by effective (and ever-improving) analytics . . . in stocks purposely chosen for their productivity . . . by making timely trades in response. In doing so we will again strive to earn as much as the U.S. stock market will allow us – and as experience shows, that can be a substantial sum – from an active trading strategy that is neither complicated, time-consuming nor expensive.
Here’s to another year of greater returns in 2017 no matter which way the market trends.
Highlights: 1 new weekly high in long positions. 15 stocks with double-digit long gains:
AHGP +13% GRBK +16% ATW +28% NEFF +33% PIR +62% PES +73%
BZN +15% HUN +15% ERF +23% TRUE +30%
EVTC +11% NGL +11%
FLDM +15% XNCR +13%