It finally happened. The much anticipated sell off. I have been mentioning over the past few weeks that the market was pricing in perfection and that I wasn’t seeing where future upside catalysts would come from. In last week’s report I mentioned the giddiness of the average investor in the form of a men’s room page of stock tickers. It wasn’t going to take much to knock the market off its peak. At bottoms, the market looks for an excuse to rally. At the top, it focuses on the negative and looks for an excuse to sell. Whether that was Greenspan’s comments on Monday about potential recession this year (note to Alan: hang it up and go find a nice island home somewhere), the China sell off, the deterioration sub primes… it doesn’t really matter. At this point its important to pay attention to what the market is telling us… and that is we’re going to remain in correction mode for sometime. Just how severe is anyone’s guess at this point, but further deterioration from here is almost gauranteed. I’m looking for some kind of weak bounce to play out this week, then the potential for another large drop. Play it accordingly.
::: Model Portfolio Update :::
Despite closing several positions last week for losses, the damage was greatly minimized with some hedging through the Nasdaq UltraShort Fund (QID) and a sizable cash position. For the week, the portfolio was off just 2.3%.. Four Quick Strike Profit positions were closed in ONT (-12%), SCUR (-5%), HOTJ (-3%) and EVOL (-3%) as well as in 2 core long plays – BITS (-9%), HWCC (-4%). Before Tuesday’s sell off, 42% of the portfolio was allocated in cash and short positions. By the end of the week, that was increased to 71%. The YTD performance dropped to +7.3%, still well ahead of the -2.2% decline since Jan 1st 2007 for the S&P500.
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::: Best/Worst Performers :::
– Top 10 Performing Industries For the Week –
1. Rubber & Plastics: .98%
2. Oil & Gas Pipelines: -.34%
3. Health Care Plans: -.93%
4. Lumber/Wood Production: -1.57%
5. Confectioners: -1.66%
6. Electric Utilities: -1.77%
7. Insurance Brokers: -1.92%
8. Property & Casulty Insurance: -2.42%
9. Gas Utilities: -2.61%
10. Manufactured Housing: -2.62%
– Top 10 Worst Performing Industries For the Week –
1. Hospitals: -16.51%
2. Silver: -12.54%
3. Drugs Generic: -10.19%
4. Industrial Metals & Minerals: –9.71%
5. Gold: -9.25%
6. Recreational Goods: -9.13%
7. Medical Laboratories & Research: -9.01%
8. Investment Brokerage – Regional: -8.86%
9. Investment Brokerage – National: -8.82%
10. Drug Related Products: -8.77%
– Top 5 Best Performing ETFs For the Week –
1. Morgan Stanley China (CAF) 5.80%
2. Japan Equity (JEQ) 4.90%
3. Korea Fund (KF) 4.85%
4. China Fund (CHN) 4.75%
5. Ishares Japan (EWJ) 4.30%
– Worst 5 Performing ETF’s –
1. Morgan Stanley China (CAF) -12.93%
2. Ishares Malaysia (EWM) -12.28%
3. Ishares Silver (SLV) -11.36%
4. Latin America Fund (LDF) -11.13%
5. Japan Small Cap (JOF) -10.73%
::: IPO’s Worth Watching for This Week :::
1. Xinhua Finance Media (XFML): based in Shanghai, is a media company that provides financial news and data in China. The company has ties to Xinhua News Agency, the state-controlled news agency of China. Trading set to start on Friday.
2. Sourcefire (FIRE): provides network security technology designed to detect and block hackers. It is best known for Snort, one of the industry’s leading open source intrusion detection products. Trading set to start on Friday.
::: Upcoming Economic Reports (3/5/2007- 3/9/2007) :::
Monday: ISM Services
Tuesday: Productivity, Factory Orders
Wednesday: Fed Beige Book, Consumer Credit, Crude Inventories
Thursday: Initial Claims
Friday: Avg Work Week, Hrly Earnings, Nonfarm Payrolls, Trade Balance, Unemployment
Rate, Wholesale Inventories
::: Notable Upcoming Earnings Reports I’ll Be Watching This Week :::
Monday: None
Tuesday: Fuel Teck (FTEK), Heely’s (HLYS), Iconix Brands (ICON)
Wednesday: American Eagle Outfitters (AEOS), Copa Holdings (CPA), Companhia Vale do Rio
(RIO)
Thursday: Gmarket (GMKT), Omrix Biopharmaceuticals (OMRI), Costco (COST), Hovanian (HOV)
Friday: None
::: Latest Blog Entries – In Case You Missed Them! :::
– SelfInvestors Blog –
1. Market Correction Now? Now What?http://investing.typepad.com/tradingstocks/2007/02/market_correcti.html
2. After Market Report – The Straw That Broke the Markets’ Back http://investing.typepad.com/tradingstocks/2007/02/market_crash.html
3. Highly Rated Bitstream (BITS) and Joy Global (JOYG) Break Down After Earnings
http://investing.typepad.com/tradingstocks/2007/02/trading_earning.html
4. Dealer Trak Holdings (TRAK) & LHC Group (LHCG) Break Out to New Highs After Earnings http://investing.typepad.com/tradingstocks/2007/03/trak_lhcg_break.html
5. Nasdaq Accumulation – Small Victory for Bulls; Top Home Health Care Play LHC Group (LHCG) Breaks Out
http://investing.typepad.com/tradingstocks/2007/03/nasdaq_accumula.html
6. Worden of Telechart On the Sell Off – The "Bravado Stage" http://investing.typepad.com/tradingstocks/2007/03/worden_telechar.html
7. Today’s Earnings Movers – AMN Healthcare (AHS) Break Out Fails
http://investing.typepad.com/tradingstocks/2007/03/healthcare_fail.html