stock newsletter, stock picking

November Stock Letter

November 1, 2017

Extremely low current interest rates tell us that business activity is very weak

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Overview

The S&P 500 broke over the top of its bullish trend channel. This is, generally, a signal of weakness. The Dow is at the top of its bullish trend channel (also a temporary signal of weakness) and the Nasdaq Composite is weaker by comparison. The U.S. bonds and notes have been falling since early September. The 2-year note has fallen the most with the price lower than the July low. The 30-year bond is above the July low. Bonds change trend, according to John Murphy in Inter Market Analysis, between six and eighteen months before stocks. This means that stocks could start dropping sometime in 2018.

FANG, Facebook, Amazon, NetFlix and Google have helped to support the stock market in the last few years. The only one of the four that is not bullish is NetFlix. Google, however, has dropped four days in a row breaking the bullish trend line that began in late September.

My table of relative-strength sector shows widespread weakness in the Technology Group; every sector lost strength except for a big gain in the Technology Hardware Sector and a minimal one in the Telecom Services Sector. There were also big losses in the Automobile and Real Estate sectors. The Building Sector was extremely strong. This is surprising given the Real Estate sector's weakness.

Stock Market Sectors

Sector Group Sector Contents Dec Jan Feb March April May June July Aug Sept Oct Nov Sector Average
Overall graph of strength (cyclicals) versus weakness (staples)
Cyclical Automobiles 7.1% 6.7% -3.9% 6.7% 1.0% 0.9% -3.8% 0.1% 5.8% 4.9% -6.8% -2.9% 0.04%
Cyclical Aerospace 6.8% -4.8% -0.4% 1.9% -1.0% 3.0% 2.3% 2.6% 5.2% 2.4% -1.8% -0.1%
Cyclical Machines -4.1% -0.1% -1.2% 0.0% 3.6% 0.7% 1.6% -0.6% 1.4% 2.9% 1.6% 0.0%
Cyclical Building 0.7% 3.6% 4.5% 4.0% -1.1% 0.0% 6.3% 0.4% -1.2% -0.4% 2.0% 5.2%
Cyclical Leisure -1.6% 4.1% -3.3% 6.6% 5.9% 2.2% -2.9% 4.6% -0.8% -0.7% -0.4% -1.0%
Cyclical Basic Materials -2.3% 2.7% -2.7% -6.3% -5.9% -6.5% 0.6% 1.8% 4.7% -5.2% -1.8% -2.2%
Cyclical Energy -0.9% -3.9% -5.2% -3.2% -3.5% -1.2% -0.9% -1.6% -5.2% 3.0% -0.1% -1.0%
Cyclical Media 1.0% 1.4% -2.7% 3.0% -4.6% -6.5% -1.0% -2.3% -5.7% -4.0% -8.0% 0.3%
Cyclical Real Estate 1.4% -2.1% -0.3% 1.8% -0.9% -2.1% 1.6% -1.9% 0.5% -0.5% -5.7% -5.4%
Cyclical Retailing -3.9% -1.7% -0.8% 0.0% 3.9% 1.1% -5.8% -1.1% -0.1% 2.1% -1.8% 5.0%
Cyclical Transportation -2.6% 1.6% -0.5% -3.2% 0.9% 2.9% 11.9% -7.1% 2.4% 2.1% -2.9% 2.5%
Finance Banks 0.0% 1.9% 2.6% -6.4% -1.7% -6.4% 8.2% -1.0% -2.2% 0.1% 0.1% 0.2% 0.63%
Finance Diversified Financials 0.6% 0.4% -0.9% -3.0% -1.0% -3.1% 6.2% 0.1% -2.0% 0.1% -0.7% 1.5%
Finance Insurance -0.5% -0.2% 0.1% -0.9% 1.0% 2.2% 3.9% 1.9% -3.8% -0.2% -0.6% 0.2%
Staple Cmmcl Svcs & Supplies -1.1% 2.2% 2.8% -1.8% -2.0% -1.8% 0.1% -0.7% -1.0% 0.4% 0.0% -0.9% 0.24%
Staple Consumer -1.6% 2.0% 1.3% 2.6% -2.2% 1.1% -1.3% -1.8% -0.1% -0.9% -5.7% 0.5%
Staple Apparel -8.7% -12.1% -5.1% 4.9% -1.3% 0.8% 4.1% -2.5% 0.3% -1.2% 0.9% 3.8%
Staple Food & Beverage 2.5% -2.7% -1.8% 1.5% -1.8% 0.1% -4.1% -1.4% -3.0% 0.0% -3.0% 2.3%
Staple Alcohol & Tobacco 0.7% 1.0% 2.3% 1.8% 3.4% 5.0% -5.8% -2.2% 0.5% -0.4% 0.5% -2.7%
Staple Health Care -1.0% -0.7% 1.7% -1.4% 0.1% -1.4% 4.8% -2.7% 0.6% 1.7% -5.5% 0.5%
Staple Agriculture -0.4% 0.7% -1.5% -1.0% -4.5% -0.2% -0.4% 0.7% -4.0% 0.9% -0.7% 0.1%
Staple Chemical -3.0% 2.6% -2.1% -0.2% -0.9% -0.5% 1.6% -0.4% 0.1% 1.7% 2.9% -1.2%
Staple Utilities 2.1% -2.3% 0.0% 1.8% -2.0% 2.5% -4.9% 2.4% 1.4% -0.4% 2.4% -0.2%
Technology Pharma & Biotechnology 0.6% 4.2% 2.9% -1.7% -2.0% -5.5% 6.4% -1.0% 2.4% 1.5% -13.9% -1.2% -1.60%
Technology Semiconductors 2.1% 5.8% -5.2% 6.1% -0.6% 9.7% -2.7% 8.3% 3.0% 2.9% 9.7% -5.5%
Technology Software & Services 1.0% 7.0% -6.4% 5.3% 4.0% 10.2% 0.4% 2.0% 4.4% -1.8% 0.3% -4.0%
Technology Technology Hardware -0.7% 6.2% 4.0% 1.2% 1.4% -0.2% -4.9% 1.6% 2.0% -1.9% 1.8% 3.6%
Technology Electronics 1.7% 0.1% 6.0% -1.7% 1.8% 2.4% 2.4% 0.6% -0.5% 0.8% 5.4% -0.2%
Technology Internet 3.7% 1.9% -1.7% 0.8% 5.8% 2.3% -3.7% 5.3% 1.0% -0.7% 3.6% -4.6%
Technology Telecommunication Services 0.5% -2.5% -5.4% 0.2% -3.0% 0.6% -6.5% 0.4% -3.5% -4.4% -10.3% 0.7%

Futures that affect Stocks

These futures parallel or move opposite to the market. Crude oil and gasoline mostly move opposite to the market. The note and the bond tend to move with the market but the bond and note generally change trends six to eighteen months earlier then the stock market. The dollar also tends to move with the market because a rising dollar, tends to mirror an expanding economy.

Crude oil and Gasoline gained during October, continuing their bullish trend that began in January.

Both the 30-year bond and the 10-year note fell during October. Eventually, the fall of the bond and note will pull down the stock market.

The U.S. dollar gained during October, continuing its rise that started in September. A strong dollar is much better for consumers as it lowers the cost of imported goods.

Last Issue's Stock Selections:

(See our Trading Tutorial and Historical Trading Results)

My 9.7% gain in October was above my long-term monthly average and above the S&P 500 1.9% gain.

Shorts

VIAB 9.7%

GT - not traded

Current Stock Selections:

Longs:

No long picks this month.

Shorts:

Cenruty Link (CTL)

CTL is rated 6 out of 99 by Investors.com and is in the telecom services integrated group ranked 179 of 197 groups. Its last three quarters EPS was -29%. It has lost 4% of the funds owning the stock. The price has been moving sideways during October. Wait for a break below.

America Movil Sab (AMX)

AMX is rated 47 of 99 by Investors.com and is in the medical biomed/biotech group ranked 3 out of 197 groups. Its EPS estimate for the current quarter was -13% and the 3-year sales growth was 11%. There has been a 2% loss of funds owning the stock. X has dropped during the second half of October. Look for entry.

Historical Performance

Here are our performance results since we started this newsletter in May 2003:

Average monthly return: 5.65%

Average monthly return over the most recent 12 months: 1.34%

Average 12 month return: 68%

Cumulative return: 887%

On a monthly basis, I have beaten the S&P 500 133 out of the last 157 times.

Trading Methodology:

For more information about our trading techniques, read our free trading tutorial.

Rates (recurring):

1 Month $35

3 Months $90

6 Months $150

12 Months $250


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These comments are given to serve as guidelines only. Traders and investors are advised to thoroughly research trades prior to investing. No guarantees are made for accuracy. Trading involves risks as well as gains and the reader is solely responsible for any actions taken in the markets. Neither the author or publisher assumes any responsibility whatsoever for the reader's decisions.



This stock picking stock newsletter has had superb gains since its beginning in 2003. Stock picking in the stock newsletter is based on technical market analysis. This stock newsletter has an average monthly return of 6.1%. The stock picking in this stock newsletter has an average 12-month return of 73%. Our cumulative return since 2003 for our stock picking in this stock newsletter is 480%. Our stock picking stock newsletter has had superb gains since its beginning in 2003. Stock picking in our stock newsletter is based on technical market analysis. Our stock newsletter has an average monthly return of 6.1%. The stock picking in our stock newsletter has an average 12-month return of 73%. Our cumulative return since 2003 for our stock picking in our stock newsletter is 480%. The stock picking in our stock newsletter has had superb gains since its beginning in 2003. The stock picking in the stock newsletter is based on technical market analysis. Our stock newsletter has an average monthly return of 6.1%. Stock picking in this stock newsletter has an average 12-month return of 73%. Our cumulative return since 2003 for the stock picking in this stock newsletter is 480%.