Weekly market report -- W/E 4/09

On Financial Tides I just try to give you the facts not the hype. Another week has passed and the talking heads on the TV were as confusing as ever. Every hour it was a different story -- Oil is up that's why the market is down -- Oil is up that's why the stock market is up -- Since 1933 the market has been more up than down on the 3rd Tuesday of each week. Rather than just try to tell you what happened they over analyze and try to find some explanation no matter how lame. Let's be consistent and use our 3 yard sticks to see where we stand.


Value Line Index -- Contains 1700 stocks so it's much broader than the S&P 500 or the much narrower Dow 30

• Index was up by 2.49% this week -- That make 3 weeks in a row and better yet 3 months in a row


• The Index closed on Friday above its 20, 50 and 100 day moving averages


• Index is up 5.60% in the last 30 days


• Barchart's 13 technical indicators all signal a buy for a 100% technical buy rating

Barchart Market Momentum -- contains 6000 stocks -- Percentage of stock closing above their own daily moving averages for various time frames -- Good numbers for all 3 time frames

• 20 DMA -- 71.77% closed above -- 64.69% did last week


• 50 DMA -- 84..82% closed above -- 82.52% did last week


• 100 DMA -- 84.04% closed above -- 81.58% did last week

Ratio of stock hitting new highs to new lows for various time frames -- 1.0+ bullish, 1.0 neutral, below .99 bearish -- Bullish for all 3 time frames

• 20 day new high/new low ratio -- 1520/336 = 4.52


• 65 day new high/new low ratio -- 1082/97 = 11.15


• 100 day new high/new low ratio -- 996/76 = 13.10

Investing Strategy -- All 3 yard sticks gave me very positive vibes. If one of my stocks fails to maintain a price above its 50 DMA I'll cull and replace it. This market seems to have solid legs at the present time.

Wall Street Survivor results -- The columnists for Top Stocks have a little friendly competition over on Wall Street Survivor. This month the S&P 500 has returned 1.87% so far. I'm in first place for the month at 5.15% just slightly ahead of the Motley Fool All Stars with a 2.42% return. John Reese also beat the bench mark with a 2.36% return.

Jim Van Meerten is an investor who write on financial matters here and on Financial Tides. Please leave a comment below or email JimVanMeerten@gmail.com

Disclosure: I do not own positions in the stock contained in my blogs.

Mining for gems in the leisure sector

All investors search for the "Holy Grail" of investing: an investment strategy that just can't miss. I know, I've been looking for it for over 40 years and haven't found it yet. I've had to change my strategy several times. I had a new idea recently and decided to try it out. I'd like to share it with you and see what you think.

Here's my idea: Find the sector ETF that is currently having the highest relative strength and try to hand pick the best stocks from that portfolio. It's the Willie Sutton Theory. Willie was a famous bank robber and was asked:"Why do you rob banks?" His reply: "Because that's where the money is!"

If as a group, these are the stocks performing the best then why not search for the gems in the mother lode?


This week the sector ETF having the best relative strength is the Power Share Dynamic Leisure and Entertainment ETF (PEJ). The fund is a mixture of stocks from restaurants, cruise lines, time shares, to Expedia (EXPE), Home Shopping Network (HSNI) and even the World Wrestling Federation Entertainment Inc. (WWE), a basket of discretionary income stocks. A real mixed bag and since they include the word "Dynamic" is guess this is an actively managed ETF.

I used Barchart to make up a sample portfolio of the top 25 stocks in the ETF to see how it would rate and to my surprise I had 22 buy, 1 hold and only 2 sell technical ratings. Every single stock had a positive price appreciation in the last 50 days.

The ETF had a 19.34% return in the last 50 days verses the S&P 500 return of 8.95%. 22 of the 25 stocks beat the Index. The best return was Home Shopping Network (HSNI) at 66.22% and the worst was Starbucks (SBUX) at 7.81% just slightly less than the benchmark.


What do you think? Can analysing the fastest rising sector ETFs for gems be a solid investment strategy or am I following a pipe dream like trying to find the Lost Dutchman's mine somewhere in the Superstition Mountains of Arizona?

Jim Van Meerten is an investor who writes on financial matters here and on Financial Tides. Please leave a comment below or email JimVanMeerten@gmail.com.

Disclosure: I do not hold positions in any of the stocks mentioned.