Market Wrap - week ending 3/28/2014

This week was a bit nasty, with the leading and smaller cap stocks (Nasdaq and IWM) taking heavy losses continuing the month long decline that started in early March.  Larger (safer) stocks are doing much better although most are still not profitable, just staying flat for the same time period. 

This rotation to larger companies is fairly normal when declines occur or when fear that a larger decline is mounting, because the large players move their money from riskier positions to more defensive positions.  This week as an example, we saw the BioTech companies get hammered while utility and telecom companies did quite well.

I have commented on this defensive rotation in the past.  Many times it is a precursor to an impending larger drop in the near future.  Mutual funds and most hedge funds are unable to move their assets out of the market even if they wanted to.  They are literally forced to stay invested by their charter, which means that their investors are unfortunately not protected during large drops in the market.  So, to minimize the negative impact, they try to find safer alternatives in the market or high dividend paying investments that tend to weather corrections better.  These ‘safer investments’ still drop when markets correct, but their declines are usually less extreme or the dividends paid help offset the capital loss that occurs.  I actually spent some time on this interesting phenomenon in my upcoming book, entitled “Buy and Hold Hope” due out in just a few months.

You probably have noticed our accounts over the past two weeks have been slowly lowering their exposure in the market, moving more and more assets into cash.  Both “the One” and our medium term strategy have exited completely, with the longer term strategy still invested fully.  I always find it interesting when the different strategies start moving in step, verifying in a sense the need to be cautious right now.

It is interesting to note that the S&P has experienced very little loss from the high made earlier this month, in fact it is less than 1% off the top, yet the Nasdaq has fallen over 5%.  All of the indexes have basically made no money year to date.  With the Dow, Nasdaq and Russell 2000 in negative territory and the NYSE and S&P500 barely putting in a profit (less than 0.5%).  In fact most stocks have made little money since before thanksgiving last year, moving sideways instead.  This sideways movement (or consolidation) isn’t abnormal after such a strong rise in 2013 and in fact is healthy.  Granted, if money doesn’t start moving in to the market soon, it can imply a larger decline is coming.  So far, things are holding up and the current decline is mooted.

Regardless of the outcome, we will continue to monitor and protect your accounts.  Hope you have a wonderful and safe weekend.

Respectfully,

Randall Mauro

Resnn Investments, LLC

http://resnnInvestments.com

Market Wrap - week ending 3/21/2014

A fairly dull week in the market although today certainly was a little nasty with the market making a downside reversal.  We started the day flirting with new highs (on the S&P only) and then ended closing at the absolute lows of the day, with the Nasdaq and Leaders being hit particularly hard.  From the start of the year most stocks have made very little if any upward movement.  We are in a consolidation (sideways movement), which can be healthy for a longer term move, if we can regain a leading position.

For now we wait and see if the markets can keep acting well.  We lightened our margin position in our ‘the One’ strategy slightly, although we are still on margin.  The other strategies still are fully invested.

Not much new to discuss in the market this week … we are just in a holding pattern waiting for the market to make a decision as to which way it wants to go.

Hope you have a wonderful and safe weekend.

Respectfully,

Randall Mauro

Resnn Investments, LLC

http://resnnInvestments.com

Market Wrap - week ending 3/14/2014

We find ourselves again in a declining market with the Dow, NYSE and S&P500 all in negative territory for the year (again) and IWM and QQQ (small caps and technology focused ETFs) not far above the breakeven point.

For our ‘the One’ strategy, we started the week at 100% (no margin use) and lowered our exposure mid week to 75% invested.  The market is starting to look weak again, although I think we are very close to another bounce up from here.  We have dropped a bit too much in the past week to not get some rally attempt.

Our longer term strategies are still both fully invested and are waiting for more signs of weakness in order to warrant an exit.  With a bounce (up) overdue, I would assume we will not get to this exit point in the coming week.

The market is definitely looking a bit more shaky than it did over the previous three weeks.  Down days having significantly higher volume than up days, and the down days have larger price movement ~ fear is creeping in.  More importantly, I am starting to see many individual stocks breaking apart, particularly the previous leaders.  As I have mentioned in the past, leaders ‘lead’, so if they are falling apart … it isn’t too much of a stretch that that rest of the market will follow.

Volatility remains inflated which drives the fear card, mostly driven by news events including China’s production numbers and the Ukraine situation.  And as I mentioned last week, market sentiment is still overly bullish, which as ‘secondary indicator’ is not reliable enough to use as a trading signal, but should serve as a warning sign of a potential problem down the road.

I expect to have a resolution in the coming week, whether we reverse and move back to new highs OR continue the downward slide … as we are close to the level where a bounce should occur, and if it doesn’t then I expect to see further downside quickly.  Of course, whichever way the market direction goes, we will focused on protecting your investments.

Hope you have a wonderful and safe weekend.

Respectfully,

Randall Mauro

Resnn Investments, LLC

http://resnnInvestments.com

Market Wrap - week ending 3/07/2014

Another productive week for the market.  As you see above, we exited margin and went back to just 100% invested.  For those of you that have do not have margin accounts, there was no change in your allocation; you were fully invested at the start of the week and you are fully invested at the end. 

As you have heard me say before, margin use should only be used in opportune times when the market indicators are all aligning nicely.  Since being on margin increases the risk on your account substantially, we only want to use it sparingly.  So … with the increased volatility that we have seen this week mostly as a result of the Ukraine situation, I feel it is best to remain off margin for the near term.  We are still fully invested (100%), and I still feel the market is acting very healthy, just took some of the risk off the table.  Protecting your account from decline will always be our number one goal, paramount to generating profit.

Looking at the previous week, the market had a huge decline on Monday from the Ukraine uncertainty then bounced back on Tuesday completely erasing all the previous days’ losses.  Our analysis did not show dramatic selling pressure on Monday and so we did not feel any change was necessary in our accounts.  As the week has progressed we have seen an increase in selling although nothing that causes too much concern at this point.

The market continues to act fairly well with the only concern cropping up being that investors are starting to get complacent again.  Although we do not use market sentiment in our analysis, it is just something to note that when there is too much bullish conviction in the market it can lead to a pullback.  Market sentiment is a ‘secondary indicator’ which basically means that it isn’t reliable enough to use as a trading signal, but that it a warning sign of a potential problem down the road.

Hope you have a wonderful and safe weekend.

Respectfully,

Randall Mauro

Resnn Investments, LLC

http://resnnInvestments.com

Market Wrap - week ending 2/28/2014

Another productive week for the market.  All in all, we spent the week consolidating (going sideways) with basically no gain or loss.  Given how elevated things are in the short term, this sideways movement is good action to see.  Especially given the fact that we have closed up 14 of the past 16 sessions … a pull-back would not be surprising and the fact that this is not occurring is definitely bullish.  Today in fact was a very good test as the market was down almost 1% intraday and it recovered to close down only 0.25%

As you can see above, we move back into the market on Monday afternoon on ‘the One’ strategy, which was the last strategy still out of the market.  So … we are fully invested at this stage.

The market is looking fairly ‘clean’ right now, my only concern is today’s high volume, volatile drop.  Ideally we don’t want to see steady rising and then a sharper than normal drop on heavy volume.  It shows that investors are quick to exit the second something skittish happens, which isn’t a healthy environment.  But given the complete reversal of the 7% drop in January, some of this is normal.  The short term traders have come out and are exerting influence on the market.  With that said, the fact that we did drop so much today and buyers came in and stabilized the market is definitely a good sign.   There’s no question that there is support for the market when tests occur during intraday drops.

Year to Date, the Nasdaq is the only real performer with a gain of approximately 3%.  The S&P, NYSE are barely above breakeven for the past 2 months and the Dow is still showing a loss.

Hope you have a wonderful and safe weekend.

Respectfully,

Randall Mauro

Resnn Investments, LLC

http://resnnInvestments.com

Market Wrap - week ending 2/21/2014

The market had a productive week.  Although it basically ended flat to slightly down for the week, volatility seems to be calming down and the major indexes have regained important levels and seem to be holding above them with decent support.

We are still getting some strong intraday moves, but significantly less than we have had since the start of the year.  All the major indexes are still in the red for the year (except the Nasdaq, which is showing a slight gain), but if this stabilization continues, I would assume the general market will start making gains very soon.

Last week, I expressed my concern that the market recovered a bit too quickly, but with this week’s sideways consolidation I am less concerned about the quick drop and subsequent rise from the past few weeks.  If the market is being supported by buyers at this level, then we have little to be concerned about moving forward.

I really don’t have much concern at this stage.  If I were forced to name something that isn’t ideal, I would say that the smaller companies are less favored right now than the midsized … which just implies that the large institutional investors are putting their money in larger (i.e. more stable) positions.  Given the large run up last year, this doesn’t surprise me that some caution is occurring.

All seems good in the market, given its’ protective nature our flagship strategy just needs a little more time for the volatility to calm more before we get in.  I would be surprised if we are not fully invested in the market before the middle of next week.  If things progress, we will most likely be entering in our “the One” strategy in a day or two.  Our other two strategies entered  two weeks ago and are sitting on a bit of profit, but nothing significant as of yet. 

For now, we hold and wait for the market to continue its’ consolidation and hopefully its’ previous uptrend.

Hope you have a wonderful and safe weekend.

Respectfully,

Randall Mauro

Resnn Investments, LLC

http://resnnInvestments.com

Market Wrap - week ending 2/14/2014

Given that it is Valentine’s Day and the 20^th one I am celebrating with my beautiful wife … I need to make this a short recap this week, or I won’t be able to celebrate my 21^st one next year J

Another astonishing week in the market.  Looking at the charts over the past month we have a sharp ‘V’ shape showing a substantial sell off of roughly 7% that only took a few days to accomplish, and then an equally sharp rise that brings us back close to the highs of late last year.  Although the S&P500 and Dow are still down for the year (and the Nasdaq is barely above 0), they all had an amazing week with approximately 2% rises.   

It certainly seems like the market wants to keep moving higher.  Most indicators are bullish.  Leading stocks are acting well, although they haven’t had substantial moves since the first of the year, we don’t see any sharp sell offs either … they are holding strong.  Bullish sentiment has come down to reasonable levels where as late last year this was a big concern with the frothy mindset.  Advance / Decliners are looking strong as well.

This week we had a myriad of negative economic reports come out, all of which were ignored by the market entirely.  This in itself is usually a strongly bullish gauge.  A market that rises with bad news is a healthy one, and one that drops with good news … obviously the opposite.

Lastly, the past two days we have strong positive reversals where the market spent the first hour dropping heavily and the rest of the day is spent reversing the decline and closing at a high for the day.  A market that can fall in the morning and close the day reversing any weakness is usually a healthy sign.

Our medium term and longer term strategies both entered the market this week, while “the One” is still being cautious due to the incredible volatile moves.  A market that drops and rises 6-7% as quickly as we have seen these past few weeks usually ends up with more downside to come.  Not enough time went by to create real fear and therefore we can experience another decline quickly.  If things stay sideways or increase, we will most likely enter in the early part of next week, we just need to give it a few more days to confirm that we are indeed not experiencing what is called a “fake-out”.  Remember “The One’s” primary objective is capital preservation, so we do not want to enter when the odds are against us.

Hope you have a wonderful and safe Valentine’s Day, and 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 2/7/2014

Amazingly the week closed with a slight gain on all the indexes.  If you watch the markets during the week, I'm sure you will join in my amazement.  We started the week with a nasty decline of 2% to 2.5%, then dropped a bit further on Tuesday and Wednesday, yet yesterday and today the market had aggressive moves up which ultimately completely reversed the entire week’s decline.  It was amazing to watch.  The markets are still down 2 – 5% from their highs set in December, but regained roughly 3% in the past two days.

Is it time to celebrate and let the bullish trend continue … I'm not so sure.  This type of aggressive bouncing around is not a healthy environment and until we see the daily price swings calm down, caution is still very much warranted.  Markets don’t just fall straight when a correction occurs, they decline, then rise a bit, then fall again, ebb and flow.  So … the market has recouped roughly half of its’ decline, with half still to recover. 

Looking over history, most corrections drop the market 8% and we dropped roughly 7% in the past few weeks, so technically we could be done, but with the aggressive down and up moves this past week, I'm not so sure.  In fact, today looked like nothing more than a short squeeze (Google this term if you have an interest in learning more about the markets).  This could be shaping up for the “kiss goodbye” that I referenced last week. 

Technically speaking, we have some heavy resistance above us.  Last week I mentioned that the major indexes all looked ‘broken’ with only the Nasdaq looking ‘better than the rest’.  Not much has changed with this picture.  We have fallen below the 17, 20 and 50 day moving averages and they are all converging together creating a tough barrier.  If we are to continue this upward trend, we will need to bounce above those with some conviction early next week.  This is a normal resistance point when markets try to right themselves after declining aggressively, and most times they fail the first few attempts.

Not surprisingly, all three of our models are in cash, with our longer term model finally going out of the market at the close yesterday.  As you know, our ‘The One’ moved to cash roughly 3 weeks ago, our medium term went to cash last week, and finally our longer term exited yesterday.  To me, this is very telling that all three are signaling to be out of the market.  In fact, our longer term strategy has been in the market for over 7 months, so the fact that this signaled an exit certainly tells me that we have a potential game changer going on here.  Does this indicate an impending larger decline?  Absolutely not, but it certainly shows that caution is warranted at this juncture.  Time will tell if the buying continues and we move up from here or decline further.

Regardless of the outcome, we will continue to monitor and act accordingly protecting your hard earned investing dollars …

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 1/31/2014

This week was another tough one for the market, which closed a tough month as well.  For the week, the major indexes closed with a loss between 0.5% (S&P500) and 1.15% (Dow and Russell 2000), and for the month of January, the indexes closed with a loss of between 1.75% (Nasdaq) and over 5% (the Dow). 

Volatility has risen to scary levels, with wild intraday swings.  Today as an example, the market opened with a over a 1% loss, then spent half the day rising to get all the way to break even, then dropped a little over 0.5% at the close.  These wild swings usually portend major trend changes, as fear starts to set in and day traders get extreme with their behavior.

The next week will be critical for the bulls to see if they can get control again, otherwise it looks like we have further to fall.  The market has been so resilient over the past year that I wouldn’t count on a drop, but certainly with each passing day things are looking more ominous. 

Looking at the charts of the major indexes, the Dow looks broken, NYSE looks broken, S&P500 looks broken, Russell 2000 looks broken … get my point?  Only the Nasdaq looks a bit better although it also is struggling.

It looks as though the market is giving a final “kiss goodbye” for those of you that want to learn technical analysis, Google that … it’s an interesting phenomena.  We should know by the end of next week whether this was indeed a kiss or just another fakeout.

As you know, “The One” moved to cash on Monday, and interestingly our medium term strategy went fully to cash on Wednesday.  Only our longer term strategy is still invested.  The fact that 2 of our 3 strats have left the market is probably a warning sign in itself that the character of the market has changed.

Short term things are definitely broken, Medium term things are broken or breaking (in the Nasdaq’s case), but long term we are still ok, not great, but ok.

Regardless of the outcome, we will continue to monitor and act accordingly protecting your hard earned investing dollars …

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 1/24/2014

Today we had another nasty drop in the markets. The Nasdaq which has been the strongest acting index for weeks lead today’s decline with a drop of 2.15% .  Even the Dow which generally speaking is the most defensive index and the least impacted during a decline fell almost 2%.  The breadth of the decline was wide (very few stocks were shielded from it), which is not a good sign.

Since the first of the year we’ve had a very shaky market, lots of wild swings intraday, which usually portends a top … not necessarily implying a major decline, but certainly a decline.

Volume for the past two weeks has been way above average with very little price movement, which tells us the market is struggling to make headway in its’ current direction (up).  Strong volume with no upside gain can be a signal that the big guys are exiting while there are still buyers in place.  They unload gobs of shares to the unsuspecting.  This works well as long as the buyers outnumber the sellers, but what we saw today is that the buyers dried up and the selling continued, causing the market to crater.

Except for the Nasdaq, the 50 day moving average was taken out in high volume today.  A moving average is exactly what it sounds like … it is the average price over the previous 50 days and used very heavily to help institutional investors get a gauge of the state of the market.  When it is healthy, the current price is above the moving average, and the MA is rising, and when things start to get iffy we see the market close below it and eventually the average itself starts curving downward.

Who cares … right??  Well, the 50 day moving average is a particularly good indicator for many traders because most big funds use the 50 day to buy.  So they wait for the price to fall back down to this level, then they start purchasing and the price bounces higher as a result.  Many ‘value’ investors use this important level as a buying opportunity.  But, today, we saw the market pierce below the MA with NO slow down and in fact, volume increased as the price kept falling below it.  There was no support there … which isnt a good sign.

The 50 day average was broken on the Dow, NYSE and S&P500, while the Russell 2000 (small caps) and the Nasdaq are still holding above it for the time being.

Volatility has been increasing over the past few weeks but went through the roof today, which is a troubling sign as well.  This means people are getting nervous and getting sketchy with their trades.  In fact the VIX which is a measurement of market sentiment and fear of investors rose almost 30% today … the highest level since October of last year. 

As I mentioned in previous posts, the market is very ‘pricey’ right now, so dropping a bit should bring in the value buyers that have been sitting out.  Of course, time will tell whether their buying will reverse the decline and bring more gains (which is exactly what happened last year in April, June and October) or whether they will sit out this time and let the market correct properly.

We are VERY late in this bull ‘cycle’ which started in March 2009 with no major correction since and we are VERY overdue for even a mild correction since we haven’t had anything sizeable in approximately a year and a half.  Late cycle markets are usually bumpy … so today isn’t surprising in that regard.

Looking at the market using a longer term perspective, from a technical analysis standpoint, we are still very much in an uptrend on all indexes and holding a small amount in the market for a bit longer to see if the strength will resume when prices fall a bit is prudent.

Our new volatility trigger kept us in today, although we were close at one point to exiting.  The new signal gives us a little more ‘cushion’ to ride the small bumps in order to gain the larger move. 

For now, we remain cautious with only a 30% investment in our flagship ‘The One’ fund and still fully invested in our longer term strategies.  Short term, things are definitely broken or breaking (in the Nasdaq’s case), but long term we are still looking at a healthy market, although a bit frothy.

Regardless of the outcome, we will continue to monitor and act accordingly protecting your hard earned investing dollars …

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