Stock Market Advantage Sell Signal

By on April 29, 2013

The Tactical Timing System has generated a sell signal. To comply with the system the following positions will be sold today. The proceeds will be placed in money market assets while awaiting the introduction of Vanguard’s new international bond ETFs [link].

Position (Symbol)
BT Group (BT)
Exxon Mobil (XOM)
Marathon Petroleum (MPC)
30% of the position in Pfizer (PFE)
33% of the position in Rayonier (RYN)
Weyerhaeuser (WY)

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Target Allocation:

15% equities; 85% fixed income
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SMA Comment: As mentioned from the sell signal over a year ago [link], investors continue to be forced into the high risk game of chasing equities and high yield bonds by a Fed bent on subsidizing debt while punishing savers in its endless attempts to jump start anemic economic growth. This insidious policy has created a dichotomy in risk assets where anything with yield is rising up to the stratosphere in an unrelenting tide of increasing optimism, while non-yielding securities merely appreciate at a measured pace, and commodities/precious metals producers wither.

Economic data has been below expectations which has not translated into a meaningful reaction by the stock market. There is precedent where investors disregarded economic warning signals and continued to plow money into risk assets. In 2007 housing was clearly at an unsustainable peak, subprime loans were imploding, while many financial “gurus” in the popular media continued to “whistle past the graveyard” [link].

Corporate profit margins continue to be elevated and a reversion to the mean could result in a difficult environment for equities and junky fixed income.

Caution continues to be warranted, although admittedly difficult to maintain.

UPDATE: Below is an image of the trade confirmations:

Stock Market Advantage Sell Signal

Information on the Tactical Timing System (TTS): TTS is a proprietary timing system based on research conducted over 20 years. TTS adjusts allocation between equities and bonds by 15 percentage points when timing signals are given. Signals are based on a combination of fundamental valuation measures and real-time sentiment gauges. To receive e-mail notification of timing signals send an e-mail to stockmarketadvantage@gmail.com and type “Subscribe” in the subject block. Subscribers will not receive spam messages.

Disclaimer: It is challenging to outperform a buy and hold strategy. Many investors have found themselves well served over long time horizons by investing regularly in a diversified portfolio of stocks or low cost, broadly diversified indexed stock funds. Information presented at this website is based on analysis of past data and assessments by the Tactical Timing System model. Future performance may not reflect past performance. Profitable trades are not guaranteed. No system or methodology ensures stock market profits. Although accuracy is strived for, no guarantee is made regarding the accuracy of data presented.

4 Comments

  1. Montresor

    April 29, 2013 at 3:55 pm

    This bull has not reached the wildly speculative phase as the economic recovery has been held back by the re-institution of the payroll tax. There will be a rotation out of the safer names back into the cyclicals as the housing market rebound is determined to be sustainable. Any sale of “risk assets” here is premature as much larger gains lie ahead.

    Bring on the wine!

    • Eric Chin

      May 1, 2013 at 10:09 am

      If you know what a man’s doing, get in front of him; but if you want to guess what he’s doing, keep behind him.

    • Eric Chin

      May 3, 2013 at 10:29 am

      Looks like you were right Montresor. Wednesday was a horrible day to sell.

  2. Montresor

    May 5, 2013 at 5:01 pm

    Eric it is never really a good time to sell the US stock market. Stocks rise on average 2 out of every 3 days. Besides, technological progress guarantees a rising trend over time for the equity market, in general.

    Bring me more wine!

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