Friday, December 27, 2013

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 1/3rd 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.


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

Friday, December 20, 2013

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.


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

Friday, December 13, 2013

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.


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

Friday, December 6, 2013

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.


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

Friday, November 22, 2013

Market Wrap - week ending 11/22/2013

Hello everyone, a nice calm week in the market.  Although volatility has increased a bit, the market spent the week acting in a very orderly manner.  On Tuesday we added to our position, going from 55% invested to 100% invested, so now we are fully in the market with no margin use.

Not much has changed in our analysis since last week, although leading stocks are starting to look a tad better than in previous weeks.  I'm still cautiously optimistic that the market will continue its’ upward direction for awhile longer.

Clearly the market is showing strong resilience, every time we start to see a break it quickly stabilizes and continues higher.

Next week is obviously Thanksgiving, which means light volume and most times sleepy trading since the big boys are taking the week off.  Yet, historically many new trends start during holiday weeks particularly this one and the upcoming one in December.  Since volume is so low during these periods, it is really easy for a large player to move the market and of course, once the market breaks free from a previous trend most other players jump in and happily follow.  So, although I expect low volume, it would not surprise me if we get a strong move in one direction or the other.

Until then, we stay invested and watch closely.  Hope you have a wonderful and safe weekend.


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

Friday, November 15, 2013

Market Wrap - week ending 11/15/2013

Hello everyone, we waded back into the market this week with a 55% exposure.  Although we are still seeing a slow breakdown of quality stocks, the market reversed is sharp decline last week and moved higher at the end of this week.  A classic “fake-out” yet again. 

We have seen our share of fake-outs this year with markets sharply dropping for two to three days, then sharply reversing and moving higher.  Fake-outs are quite normal in the market, but what I don’t like here is the level of intensity in the drops.  We’ve seen a number of times this year a relatively stable quiet market, then a very volatile sharp drop which is out of character, then a sharp rise (again out of character) after which the market settles down and goes sideways for a few weeks before doing it again. 

Looking back at history, this pattern is not normal and certainly won’t continue forever.  Generally when we get a sharp one day decline of 2% or more (like we had last week), investors get really freaked out and panic and although we usually get a small bounce up from there, the bounce fails quickly.  Here we are seeing sharp drops with an immediate sharp counter bounce up. 

The behavior doesn’t make a lot of sense.  We have extreme panic one day, then extreme euphoria the next.  Makes me think the computers are running the show where the buying is literally turned off for a few days, then a switch is pulled and tons of buying occurs … OR … the market is being supported by the Federal Government, just as panic sets in they step in and start buying to calm everyone’s nerves again. 

I’m not a believer in conspiracy theories, but something out of the norm is causing this eccentric behavior in the market for sure.  So far the best course of action this year has been to just close your eyes and ignore the daily movements, a ‘Buy and Hold’ strategy, yet as we all know this type of strategy eventually bites you when there finally is a clean break and we drop 20+%, which we are obviously overdue to do.

So, although this has been a frustrating market for defensive strategies like ours, I still have no doubt that over the long run we will win out by far.  The bull market of 1999 is a great example to compare to today’s market, it mirrors the moves almost exactly, and looking at 1999 we peaked late in the year and had a massive decline that lasted 3 years afterward (in 2000, 2001 and 2002) which wiped out all the gains and then some.  I'm certainly not going to try and imply what the future holds for us here, but I do know that this forgiving, constantly rising market cannot go up forever and we still have a lot of weak underlying issues that I mentioned in last week’s email that have not been resolved.

For now we stay invested cautiously and wait for more directional clues.

Hope you have a wonderful and safe weekend.


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

Friday, November 8, 2013

Market Wrap - week ending 11/8/2013

What a crazy week for the market.  The first three days was very sleepy, but yesterday and today really woke up everyone.  We started the week fully invested, and on Wednesday reduced our position to 30% invested, then today we exited fully in the middle of the day.

On Thursday we saw a dramatic drop in the market where the market finally broke out and below its’ most recent trading range.  It had been sitting very calmly for about 2 weeks with very little progress on either side, then suddenly we had an aggressive sell off.

Although yesterday caught many investors by surprise, under the surface we have been continuing to see weakness which we notated in our last few end of week emails.  This weakness caused us to reduce our exposure (to 30% invested) on Wednesday before the large drop yesterday.

Early in the week we saw a number of leading stocks continue the trend of the past few weeks .. breaking down, we also saw the continuation of larger cap DOW stocks outperforming the smaller more risky stocks.

I can say that Thursday’s decline did not surprise me … we definitely are seeing a growing negative sentiment in all stocks.  It appears that large institutions are moving their assets out of riskier smaller cap stocks and in to larger (safer) positions.  And I said last week, leading stocks are supposed to lead … and when we see them one by one fall out of favor and not able to recover, usually the larger cap stocks and indexes follow suit shortly after.

In the last two weeks we are also seeing negative market breadth.  Looking at a comparison of advancing vs. declining stocks … we see a negative divergence where fewer stocks are advancing than price would imply.  I also see the same results looking at up/down volume.  Clearly there is more volume on the selling side.

The Russell 2000 index broke key support lines this week and although they recovered those lines today they did so on weak volume.

Today’s action on the other hand, quite honestly surprised me.  With such a large break yesterday, I was surprised to see such a strong comeback.  I certainly expected a bounce up today since yesterday’s decline was so extreme (hence the reason we waited to exit the market until today instead of yesterday), but was surprised by how strong the bounce was.  With that said, leading stocks as a whole are still struggling and the pattern of larger, safer outperforming smaller company’s continues.

I really think the market is getting ready for a much larger correction, but it might not become evident for a few more weeks.  I expect to see another bounce up, and unless leading stocks recover their previous leading roles, I expect to see a sharp drop from there.

The data will lead us in or out of the market, but for now we stay in a defensive role.

Hope you have a wonderful and safe weekend.


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

Friday, November 1, 2013

Is the stock market showing signs of an impending correction?

Happy November!  I hope everyone had a safe Halloween.  I hope by now everyone has come down off of their sugar high’s from the festivities.  I know in our house, today’s was much more ‘sluggish’ than normal, with the boys having little energy for anything.

Although we are clearly still in an uptrend, I am continuing to see a lot of evidence that we might be  forming a longer term top.  Although none of our indicators are showing enough weakness to act defensively as of this moment, every day our analysis shows more and more weakness.  But … what is interesting is that the process is taking a long time which is most likely indicating that the next correction that occurs will be stronger than the last few.

The reality is that we haven’t has a strong correction since April 2011 when the market dropped over 20% in 2 months.  In 2012, we had two 12+% corrections, but both recovered relatively quickly, and 2013 has seen very little downside.  Looking over history we generally have a strong correction (20% or larger) every 2 – 5 years, so we certainly could be due for one. 

We do not use seasonal or calendar based indicators in our decision process, but rather look at the data and how the stocks are acting at that particularly time … but I do think we are overdue given the complacent views right now.  In fact, all surveys of investor confidence are excessively bullish.  We have a very frothy situation right now where most investors are extremely confident that the only place for the market to go is up.  As I’ve mentioned in the past, usually when all parties feel the same way, a change is not far off. 

A few items that are causing concern for me are …

1) The most important issue is that leading stocks are continuing their 3 week long pattern of breaking down.  One by one we are seeing the 2013 leaders breaking down and losing value aggressively.  It may be obvious, but leading stocks generally ‘lead’ the market, so if they are breaking down … it usually isn’t long before the indexes follow.

2) As I’ve mentioned previously, we are continuing to see defensive sectors take on a leadership position and  outperform the smaller cap stocks.  This week was no exception with the Dow Jones index eking out a 0.29% gain for the week while the Russell 2000 small cap declined 2.13%.  if you stretch that out longer term a similar situation enfolds, over the past two weeks the Dow gained 1.4%, vs. the Russell losing 1.79%, and three weeks ago with the Dow gaining 2.5% while the Russell gaining only 0.96%. 

So, over the past three weeks we’ve seen the Russell (smaller caps) rolling over from an uptrend to a decline while the Dow spent half the time in a strong uptrend to being flat this week … as if the Dow is following the leading smaller cap stocks off the cliff…

This is normal ‘topping’ behavior where the big guys start selling their riskier investments and move their money in the more defensive larger cap stocks that generally take less of a hit in a correction.

From a technical analysis perspective we are definitely seeing more selling pressure with volume much stronger on down days and key inflection points being broken particularly in the small cap realm.  The other area of concern technically is that the majority of stocks are overextended … stretched far from their averages and like a rubber band when it stretches too far … the stocks need to snap back.  Granted, when stocks get overextended a correction doesn’t have to occur to fix the problem, time can solve the problem if the stocks sit in a healthy manner not gaining price, but also not losing.

So far this is what we are seeing with the market as a whole is holding up well with little gain, but also little loss, creating a 3 week long “Doji”.  Doji’s simply signify indecision in the market, where price does not go up or down.  There are small battles going on between the bulls and bears, but no side has won as of yet.

With that said, each week we are seeing more and more volume, meaning the battles are getting more intense.

For now, we stay invested and continue to watch closely for further signs of a large scale breakdown.  I would imagine next week will provide clarity as to the direction of the market through the end of the year.  Until then, I hope you have a wonderful and safe weekend.


Randall Mauro
Resnn Investments, LLC

Wednesday, October 9, 2013

How will the Government Shutdown affect the stock market?

Hello everyone.  I hope you know that I try not to bombard your inbox with emails, yet in particularly volatile times I feel it is important to keep you abreast of any portfolio changes or important analysis.

As you already know, we have been lightening our position over the past two weeks and we continue to do so.  Today we are only 30% invested in the market (70% in cash), clearly moving defensively.

My personal feeling is that we are a very critical crossroad in the financial markets.  The financial ramifications of a Government shutdown are incredibly far reaching and with each passing day of no resolution we get closer to the point of no return. 

I certainly don't want to create fear and think it is premature to even think in a fearful way, but the data we analyze certainly is starting to show fearful patterns.

I am still optimistic that we will have resolution in the coming days and the markets will stabilize.

Yet, unfortunately we don't have the privilege of knowing the future and I think you will agree with me that this situation has the potential to become much, much more serious.  The reality is that we could be setting up for a significant drop in the market similar to what we saw in 2008.

Although selling stock now could prove to be a mistake if the market stabilizes and continues higher (as I personally feel will happen), having a defensive approach to me is the only approach given the risk involved here.

As you know when we analyze our data, the goal is to find the answer to one question, "Is the market healthy or not?"  The answer to that question helps us to decide whether we need to be aggressive or defensive in our exposure to the market. 

If the market is healthy, our goal is to maximize growth ... to increase our risk with the goal of profit.

But, if the market is not healthy, we have only one goal, and that is to protect your investments.  To me, you can’t achieve both at the same time.  You either focus on growth or focus on protection, one or the other … and our models are geared to switch quickly from one to the other as the climate changes.  So, our only priority is to protect you.

The situation is obviously changing rapidly, which will make for some wild swings over the coming few weeks I'm sure.  We will continue to monitor every tick in the market, watching for signs of strength or continual weakness and will adjust the portfolio accordingly, but for now we stay on the defensive.

I will continue to update you of any future changes in the near term.  And, as always … If you have any questions, PLEASE feel free to email or call me at any time, day or night.

Randall Mauro
CEO - Resnn Investments, LLC

Tuesday, August 27, 2013

Today was pretty nasty ...

Hello everyone.  We had a pretty scary drop in the stock market today.  For most long term investors, today alone wiped away over 2% of their net worth. 

Most investors are asking me … if it is time to protect their nest egg?

There’s an old saying in the stock market, “Pigs get fat, Hogs get slaughtered”.  This year the US market has had a phenomenal run, but many are now wondering if it is time to protect your nest egg and move to a cash (safe) position.  As many of you have experienced in 2000 and 2008, “Buy and Hold” many times becomes “Buy and HOPE”. 

Our analysis is certainly showing that caution is warranted.  It looks like we have a much larger drop coming over the next few months.

As many of you know, we invest differently than most financial advisors do, our strategy is a protective one, where we move to the safety of cash, completely out of the market when things get scary.  Our number one rule is to ALWAYS PROTECT OUR CLIENT INVESTMENTS FROM DECLINE.

In fact, none of our clients are invested in the market at the moment … we moved all of the accounts out of the market (100% in cash) last week as a result of the weakness we were/are seeing.

The question that should be on your mind right now is … should you take action and “get out while you can”?  Or is the risk worth sitting and hoping that we don’t have another potential 2008 re-hash where most investors lost over 40% of their net worth in the year.

If you have ANY questions related to what YOU SHOULD DO, please feel free to call me directly (my personal cell phone is listed below).  I promise I will NOT sell you on anything, but just help you come to the right decision for your own situation.  My personal cell phone is always on for my clients including weekends and evenings. 

also, I encourage you to check out My Personal Commitment that I sign with each and every one of our clients.  You will be surprised at how different our client experiences are from what you probably are used to, and my personal guarantee is a large part of that.  View it at:

Please feel free to call me for any reason,

(818) 985-2000
CEO, Chief Investment Officer
Resnn Investments, LLC

P.S. Get notified in the future of important changes in the market as they happen, sign up at our website ( for our FREE Market Alerts service.  We actually sent an alert over two weeks ago warning of this impending drop. 

Friday, July 19, 2013

Market Wrap - week ending 7/19/2013

Below is a client email alert that was sent earlier today ...

Hello everyone.   A quick update on your Resnn portfolio …

Margin / Leverage use: 10%
For those of you who have opted out of margin use, your account is fully invested (100%) in the market.

This week the market continued its’ strong resilience and as a result (on Monday) we moved all margin accounts onto margin, albeit only 10%.  As I have mentioned in the past, using leverage can have very powerful results for your account (both good and bad), so we use it very cautiously and are quick to exit margin at the first sign of trouble.   Remember that our primary purpose is to protect your capital, so the use of leverage is something that we are very careful to apply.

For the week, the S&P 500 climbed 0.7%, and the Nasdaq slipped 0.3%.  All in all, most of the week was spent consolidating the recent run up in prices … more settling down.  After such a sharp upward movement, I am very happy to see more calming action, vs. what we usually see after a strong run up … which is an equally strong decline in price.  This ‘quieting down’ shows that investors are interested in keeping their money invested in the  market for the time being. 

This is further evident by observing the disproportionate rise in price of smaller company stocks vs. the safer “blue chips”.  The Russell 2000 advanced 1.59% this week.  When ‘small caps’ move ahead of the rest of the market as they have for a few weeks now, it usually signifies investor’s appetite for riskier investments.  Smaller companies are much more prone to wild movements and news driven events, so seeing this sector outperform the larger companies can be a bullish indicator in its’ self, signifying a healthy market and higher prices to come.

Another bullish indicator this week is the markets’ continued resilience of news.  This week there were a slew of technology company disappointing earnings releases (Microsoft, Google, Dell and Intel to name a few) that beat down the individual company stock’s price but in a more finicky market could have dropped the entire market and did not.  All week long, various representatives of the Federal Reserve distributed conflicting information about the eventual slow down of its’ bond purchasing program which should have caused the market to get spooked and drop, none of which occurred. 

One item that continues to concern me and bears watching is the sharp rise in oil prices.  Today WTI crude oil closed at an almost all time high at $109.00 a barrel.  On July 1st the price was $96.00.  Most of this rise in price is due to panic set in by the instability in Egypt and any stability there could send it right back to the $90s in a hurry.  Yet, in the mean time, this ultimately is going to result in much higher gas prices which will dramatically impact the economy … and potentially the market. 

The economy is driven almost entirely by consumer spending (approximately 70%) and when gas prices (and other essential purchases) rise, people ultimately spend less on non essential items.  The price of gas has a huge impact on the overall health of our economy and something that concerns me for the latter part of this year.  It will be interesting to watch how this plays out, but it certainly is something I’m not excited to be watching.

For now all of our data point to rising prices ahead, and we are positioned nicely if that occurs.  As you know, our model is entirely data driven.  The decision to be invested in the market is driven by the strength (or lack therefore) of the underlying stocks that we analyze.  As you know, my personal feelings and interpretations have no bearing on the decision process.  Although I mention a number of hypotheticals and news items in these weekly emails, it is only the reaction of the market to these various issues that we care about.  What looks like bad news to you or me really means nothing if the market sloughs it off and keeps rising and that is what our analysis is geared to discover … removing the opinion and emotion and just using the price strength or weakness to identify whether it is safe to be invested at any moment.

For now, the uptrend continues and we hold on for the ride.

May you have a peaceful weekend.

Friday, July 12, 2013

Market Wrap - week ending 7/12/2013

Below is a client email alert that was sent earlier today ...

Hello everyone.   A quick update on your Resnn portfolio …

Margin / Leverage use: 0%

This week the market continued its’ strong resilience and rebuilding effort.  As noted in last week’s post, freshly off an almost 8% correction lasting most of June, the first two weeks of July have been almost entirely positive … a straight up recovery.  Although the S&P500 and Dow Jones have yet to make new highs, the Nasdaq made a new high Thursday and continued its’ upward trajectory today again.  This is exactly the kind of action you want to see after a correction, a strong unrelenting uptrend eliminating the previous price correction quickly.

This is the third time this year that the market has shaken off its’ weakness and gone on to move to new highs, and although the latest correction (in June) is the most aggressive of the three possibly showing a tired uptrend, the sheer fact that we were able to move into new high ground and stay there for a day implies we are off to a good start.  The fuel this time again seems related to the Federal Reserve’s continual monetary purchase program, fueled this week with Bernanke’s statements on Wednesday being interpreted euphorically.

Another strong indicator of the market’s strength is its’ ability to ignore bad news.  A market looking for trouble as an excuse to go down might have found it in the news today, if the bears were in charge.  The University of Michigan’s consumer sentiment survey was weaker than expected, though only narrowly so. The producer price index showed more inflation than the Street estimated, though energy appeared to be the chief culprit.  Fitch Ratings downgraded France on concerns about a lack of
growth and rising government debt, but when has the Street ever been much concerned with France?  Yes, all of the above items are relatively light on the worry scale.
But a fussier market might have grabbed one or more and run to the sidelines.

As I alluded to in last week’s post as the market continued stabilizing and was further confirmed with our data analysis, we entered the market earlier this week and positioned our client portfolio’s fully into the market with a fairly even split between the S&P500, Nasdaq and Russell 2000.  We are now 100% invested in the market, using no leverage as of yet.

For now, the previous uptrend continues and we hold on for the ride.

May you have a peaceful weekend

Friday, July 5, 2013

Market Wrap - week ending 7/5/2013

Below is a client email alert that was sent earlier today ...

A quick update on your Resnn portfolio …


Happy July 4th to everyone … Holiday weeks are tough in the stock market because most institutional traders are taking time off, volume is light and as a result it is very easy for a large player to manipulate the market.  Many major moves start during light volume weeks, and time will tell if this is one of those times.

The market continued its’ stable ‘basing’ or rebuilding after its’ most recent decline.  Since late May the S&P500 dropped over 7.5% and has since stabilized and recovered roughly half of that loss to date. 

As you know, we moved to cash early in the decline, since moving to cash our portfolio has fallen only 2.4% vs. the S&P losing 7.5%.

We are still in a ‘wait and see’ mode, protecting your investment in a cash position.  Although the market continues to act healthy and is ‘calming down’, there are still warning signs that we are monitoring. 

One of which is the market’s reaction to the Egyptian regime change, which so far is completely non-existent.  The price of oil has jumped which ultimately will hurt our economy if it doesn’t fall back down, but for now … the market doesn’t seem to care.  Watching the market slough off such potentially bad news is a very strong sign, when the bulls ignore bad (or uncertain) new items and keep buying … it sends a strong signal to the bears.

Assuming there are no negative jolts in the market early next week, it would not surprise me if we will carefully re-enter.  For now, we continue to wait and watch on the sidelines focusing on protection over growth.

Hope your weekend is peaceful,

Friday, June 28, 2013

Market Wrap - week ending 6/28/2013

Below is a client email alert that was sent earlier today ...

A quick update on your Resnn portfolio …


Last week’s aggressive continuation of the drop in prices that started in late May finally found a short-term bottom on Monday of this week.  From Tuesday on, the market has risen and more importantly … ‘calmed down’. 

As I mentioned in our last message (from last week), panic had set in and when that occurs the market tends to drop very quickly and aggressively.  Usually during these panic ‘sessions’ the best thing to do is to sit on the side lines and wait for the masses to calm down. 

Trying to guess the bottom is a fool’s activity, and in fact in the trading world, a famous saying is “don’t try to catch a falling knife”.  Instead of trying to guess the bottom, we prefer to protect our investment and watch the action to see if the selling is subsiding and a calm is starting to occur. 

This week we started to see that calming effect as the selling finally subsided on Monday and we had a nice rise Tuesday, Wednesday and Thursday.  The week has been fairly productive in this regard.

We are still fully in cash at this point, the market’s decline from late May is very much intact at this point and although the market action is looking better this week, more time needs to occur before we will be willing to risk assets. 

As I have mentioned previously, when markets decline, waiting and watching the first few rally attempts is very telling as to the future direction of the market, and this week’s rally attempt has been productive but not convincing as of yet.  In fact, the data we analyze is still pointing to more downside.

For now, we wait and watch on the sidelines focusing on protection vs. growth.

Hope your weekend is peaceful

Thursday, June 20, 2013


Below is a client email alert that was sent earlier today ...

Good afternoon.  In light of today’s market action, I wanted to send you a quick note allay any concerns you may have.  I will write a brief note below, but wanted to let you know that we are fully in cash and have been for roughly a week now.  So if the market continues to tumble, take comfort in knowing that your money is safe.

I don’t know how closely you follow the stock market’s daily action, but I'm certain you will hear about it on the news tonight.    Today’s market action was abysmal closing with roughly a 2.5% loss for the day, combined with yesterday’s 1.2%+ loss.

When market’s fall, they fall fast because fear is a greater emotion than greed … and fear creates panic … which is what we are seeing today.

What is most interesting today is how there literally is no safe place (besides cash) for your investing dollars. 

intermediate term bonds are down around 1.8% for the week (1% loss today alone)
International Markets are all down between 2% and 4% as well (china -2.77%, Germany -3.28%, France -3.66%, Hong Kong -2.88%, Italy -3.09%
Gold even made a 2.5 year low … down over 5%

As you know, on June 5th I sent an email (written below) that we were taking defensive action and slowly moving out of the market.  This process has continued and we were fully out of the market, 100% in the safety of cash on 6/13/13 (exactly one week ago).

In my previous email I wrote about the importance of the next rally attempt to identify the strength or lack thereof in the market’s internals.  The key question a rebound rally attempts to answer is … are people looking at this short term dip as a buying opportunity (buying stocks cheaper than they were a week ago), OR are they staying out of the market and not buying anything (implying a much more aggressive drop is forthcoming).  In this case, we have had two relatively pathetic rally attempts in June, culminating obviously in what we see today.

In any case, as always I am watching our investments very closely and letting the market data guide our decision process.  If things settle down, we could be back in the market as early as next week, but we will only do so if the market is truly flashing healthy signals.  As you know, I only two rules at Resnn … 1) Always, always, always minimize risk, preserving your investment is the most important and 2) let’s make money. 

Protection of your investments will always be my number one priority.

Please feel free to call me to discuss any financial matters … my door is always open.

Hope you have a wonderful weekend … sleep well knowing that we have your investment safe.

Wednesday, June 5, 2013

Defensive Action

Below is a client email alert that was sent earlier today ...

I wanted to send you a quick ‘status’ update just in case you have not logged into your Resnn account recently.  In light of the market’s recent weakness, we have been taking a very cautious, defensive approach.  Early last week we exited margin (for our clients that choose to use margin), and we moved 25% of all our accounts to a cash position (leaving 75% invested in the market).  Today we increased our cash holding to 45% cash (55% invested in the market).

Raising cash in light of the volatility we are seeing is exactly what the model is designed to do.  Protecting our original investment is paramount to trying to profit in volatile markets, and this is exactly what we are doing … protection is key.

The market is due for a bounce (up) and the strength of that bounce will be very telling as to which way we go next.  I am watching our client portfolios very closely and letting the data lead the decision process.  The model is acting as it should, focusing on protection at this point.

If you have any questions, please feel free to call or email me, otherwise … I just wanted to let you know that we have moved from a profit motive to a protective one.

I will send you more updates as the market gives us more clues as to the longer term direction of the market.