Market Wrap - week ending 12/27/2013

This year has proven frustrating for short-term based strategies like our flagship “the One” strategy.  The strategy is very quick to respond to weakness and protect your investments, but as we have seen this year as we have defensively moved to cash the market each time would stabilize and continue higher, leaving us in the dust.

Obviously these types of resilient markets do not come around often otherwise we would have no need for a defensive approach.  It is important to remember this point and never get too bullish in your approach. 

In fact, looking over the past 40 years, there were a handful of years where our strategy did exactly as we are seeing occur this year, but obviously over time those underperforming years are more than made up for when we are protected and the market proceeds to have massive declines.  The two most recent examples of this were in 1999 when our annual return was less than 3% while the Nasdaq returned over 80% and in 2009 when the market returned 44% and we returned 15%.  Both of these underperforming years over time were mitigated. 

To use 1999 as an example, at the end of four years we ended up with a total gain of 4.8%, while the Nasdaq lost over 39%.  If you had invested $100,000 in the Nasdaq during this period, at the end of 2002 you have been left with $60,907 while investing in Resnn’s “the One” would have grown to $104,798.00

1999                       2000                       2001                       2002

Resnn’s “One”  2%                          0%                          7%                          -3%

Nasdaq            86%                        -39%                      -21%                      -32%

I realize this doesn’t make one feel much better when they miss out on the nice move we have had this year, but I have absolutely no doubt through the years of data analysis we have performed that even in these resilient times, it pays to remain defensively focused even if that means you miss a large up move. 

The market remains incredibly elevated, but as I have mentioned previously … it can remain this way for months longer.  Investors Intelligence reported this week that bullish sentiment was at an astounding 59.6% while bearish sentiment was at 14.1% bears.  According to Investors’ Business Daily, “this indicator is signaling a market top, but sometimes the top comes weeks or even months after the signal occurs.”

For now, our “One” strategy signals caution as we continue to sit out of the market.

In light of this strong market, we are officially introducing two new strategies that are designed to catch the longer term trends.  Where our “One” strategy is designed to catch shorter term “swing” trends in the market, these two new strategies are designed to stay invested longer and catch the medium and longer term trends. 

As an example, our longer term strategy has only exited one time this year (in June) and as a result has caught the bulk of the up move during the year.  These two new ‘longer term’ strategies in a sense move slower and require a little more effort to move in and out of the market, which can be good but also bad.

Year to date, the longer term strategy has returned over 32% while our medium term strategy has returned just under 25% and our shorter term “One” strategy has returned slightly less than 9%.  In strong trending up  markets like we have had this year obviously the longer term slower strategy will do better, since doing nothing has really been the best course of action, but these longer term strategies will be slower to move to cash when the market truly does correct and therefore will have a larger negative impact in those years.

Unfortunately, we can’t have one strategy that is the “Holy Grail” and can outperform in all markets.  There are certain times where one strategy is optimal and other times where it will underperform.  Yet, over time if you can wait out the frustrating moments, I think our “One” strategy is as close to a “Holy Grail” as you could find.  It’s defensive nature will protect your investments when the next major correction occurs.  With that said, if you would prefer to catch more of the up moves, at the expense of potentially catching more of the down moves, then a combination of our three strategies might serve you well.

I have already spoken to a number of you about our two newest strategies and will continue to introduce them to all of you via email and phone.  They certainly are something you may want to consider adding, either putting 1/3^rd in each of the three strategies, or moving 50% into one of the two new strategies and leaving 50% where it is now.

I will send you more information in the coming weeks on the subtle differences between the three strategies, so you can make an informed decision as to where you will feel most comfortable.

In the mean time, I wanted to thank you for your continued support and look forward to protecting your investments in 2014.

Hope you have a wonderful and safe weekend.

Respectfully,

Randall Mauro

Resnn Investments, LLC

Our market wrap is published weekly, sent via email on Friday after the market close, with alerts sent occasionally mid-week in particularly volatile times.  To sign up for this free service, please visit our website at http://resnnInvestments.com

Market Wrap - week ending 12/20/2013

Hello everyone.  This week proved interesting for sure.  Everything looked dire in the early part of the week, until the Federal Reserve announced on Wednesday their decision to end the uncertainty about its quantitative easing strategy, which the market clearly applauded.  The latter two days of the week resulted in big up moves. 

As I mentioned previously a few times, uncertainly is the market’s biggest enemy, and having clarity on the Federal Reserve’s tapering plan removed a lot of questions on people’s minds, allowing the market to continue on its’ current trajectory.

Things certainly continue to remain frothy.  In fact the latest Investors Intelligence survey shows just 14.3% of newsletter editors as still being bearish, the lowest level since March 1987.  This is not an indicator that can be used to trade with, but it is unsettling the level of bullishness for sure.  As I mentioned in the past few weekly emails, the market can remain elevated or ‘overbought’ for much longer than anyone can predict, so trying to argue or time the market based on overbought indicators tends to be a sobering experience. 

Obviously, looking over history, we won’t continue higher forever, we are clearly overdue for a correction, and it is important to remember the historical facts and not get too bullish.  The market will correct, but it might still have significant more upside before it does, time will tell. 

The next few weeks will be interesting as most investors take the time off.  The markets can move very easily and manipulation is usually highest in these low volume time periods.  I look forward to seeing if we can continue this upward directory through the end of the year.  It certainly seems like that is the path we are on with so much bullishness.

Hope you have a wonderful and safe weekend.

Respectfully,

Randall Mauro

Resnn Investments, LLC

Our market wrap is published weekly, sent via email on Friday after the market close, with alerts sent occasionally mid-week in particularly volatile times.  To sign up for this free service, please visit our website at http://resnnInvestments.com

Market Wrap - week ending 12/13/2013

Hello everyone, as you know from the mid-week update I sent, we moved fully to cash on Tuesday and have remained there the rest of the week.  The market has fallen 1.73% since we exited. 

Although the underlying issues that we track look quite weak at this moment, we have been in this situation a few times prior this year and the market stabilized and continued higher.   As in previous times, we are seeing a calming in the decline and in fact, not much panic at all, which is obviously keeping the market a float. 

Market sentiment is still at an all time high, which although we do not use in our trading algorithms, is notable.  If no one thinks the market will fall, then we likely will not see panic and for awhile this will keep the market in a controlled sideways move.  This doesn’t work forever, but it can for a few months if no new money comes in.

Time will tell if this time it will be different from the previous declines this year.  Certainly this year has been an anomaly, in fact one of the triggers that we use has triggered more times this year alone than over the last 40 years combined … showing that we have a strange market that isn’t acting according to the historical rules.  Moves like this usually end up badly, but there’s no reason that the market can’t continue higher from here for a time.

The next few weeks will prove trying as the big dogs take leave and volume dries up.  The last few weeks of December are usually good ones for the  market, but with such a huge rise already for the year, who knows what we will see.  Certainly with the lower volume, it is really easy for market makers to move the market at their whim, which will make things interesting I'm sure.

For now, we stay on the sidelines protecting our capital.

Hope you have a wonderful and safe weekend.

Respectfully,

Randall Mauro

Resnn Investments, LLC

Our market wrap is published weekly, sent via email on Friday after the market close, with alerts sent occasionally mid-week in particularly volatile times.  To sign up for this free service, please visit our website at http://resnnInvestments.com

Market Wrap - week ending 12/6/2013

Hello everyone, not much has changed since our last update.  We are still 55% invested in the market (45% of the portfolio is safely in cash), obviously no margin use these days.

Although we are still flirting with 52 week highs, the market continues to flash very conflicting messages.  For the week, the market basically broke even from a performance perspective, so we are holding up which is good.  Volume continues to be a problem on the up days, which is nothing more than a warning signal, low volume by itself is not an excuse to exit the market, but rather just something to continue to monitor along with other signs of potential weakness.  We just do not see much strength behind the up days. 

Leading stocks also are sending a mixed bag, while some are acting well, most have broken and are basing which most times would be considered productive, but with the weaker stocks leading the stronger ones, caution is certainly warranted.

Market sentiment is again at all time highs and although we do not use these indicators in our trading decisions here at Resnn, this level of euphoria is certainly not sustainable over the long haul.  I have spoken about this in previous emails, so I won’t bore you further on this topic.

For now, we stay invested with slightly more than half our portfolio at work and the other half sitting safely on the sidelines … a bit of caution goes a long ways.

Hope you have a wonderful and safe weekend.

Respectfully,

Randall Mauro

Resnn Investments, LLC

Our market wrap is published weekly, sent via email on Friday after the market close, with alerts sent occasionally mid-week in particularly volatile times.  To sign up for this free service, please visit our website at http://resnnInvestments.com