The same institutional investors who aggressively bought stocks 5 weeks ago and 2 weeks ago suddenly became sellers last week. This whipsaw of sentiment indicates great market uncertainty among even the “smart money” – the same behavior that was evident throughout the first six months of the year. Makes it hard for the rest of us to profit significantly when there is no conviction, no follow-through and little sustained trend-producing behavior on the part of our “guides”.
With a market sell-off and most of our positions long, it was a give-back week for most of us. Abnormally high numbers of abrupt reversals – most for loss – more than offset the good gainers, dampening year-to-date returns. As long as trends remain extremely short-term and reverse before gains can even materialize or at loss, and a higher-than-usual number of positions remain in the red, overall net gains will remain elusive.
Although our results-to-date are lower than in previous years, we are still significantly outperforming passive investors. Other than a slight gain in the Nasdaq Composite, other major indexes are negative on the year – investors in the S&P500 Index have no gain dating back 14 months, investors in the DowJones Industrials Index have no gain dating back 15 months.
Adding to already uncertain market sentiment for next week is the effect of the terrorism in Paris which occurred after markets closed Friday. Difficult to gauge whether the U.S. market will mimic the reaction of European markets and what that reaction will be.
Highlights: only 2 new weekly highs. Double-digit long gains – diminished – in CALL +16%, MESG +18%, NOAH +13% and VIMC +11%. Locking in long gain of +14% in LUV (5 weeks).
4 new weekly lows. Double-digit short gains – increased – in AHGP +22% and DENN +16%. Locking in short gains of +22% in MDXG (7 weeks) and +11% in XNCR (7 weeks).
Stock List Changes: Deleting USMD (low volume) after routine scheduled evaluation. Adding Eldorado Resorts (ERI) [casinos & gaming] with a past 9 month compound trading return of +100.6% and trade indicated.