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Thursday, November 30, 2006

Good Morning

Short-Term Technical Indicators – The 21-Day Breadth and Volume indicators for the Dow improved yesterday as did the 15-Day Relative Strength indicator. Conversely, the MACD and the 15-Day Stochastic indicator continued to weaken.

With regard to the S&P 500, the On-Balance Volume % indicator slide further into bearish territory with a value of 359.25. The On-Balance Volume % indicator is slightly different than the more common On-Balance Volume indicator since it uses the 21-Day Sum of OBV divided by the 21-Day Sum of Total Volume.

Any new highs near the upper band (21-Day MA, 3.5%) made by the index need to have a corresponding OBVP value higher than 630.02, which occurred on October 31st. If we see a new index high without a new OBVP high, the trend is “technically weak” and should soon reverse direction. Currently, the SPX is trading in the middle of the band, so this indicator doesn’t really come into play just yet.

Below is an example of how an up-trend with a new SPX high near the upper band was supported by a new OBV high, extending the rally further.

Long-Term Market Model – Bullish since August 23rd.

Investor Sentiment – Yesterday’s session saw a decrease in both the VIX and the VXN as well as all three Put / Call ratios.

Asset Allocation – 100% invested within the actively-managed, alpha producing portion of the overall portable alpha portfolio.

Beta Exposure and Portable Alpha Generation
Date = Date of AAS “Buy” or “Short/Sell” Recommendation

Top Rated Major Market Derivative – Fidelity NASDAQ Composite (ONEQ 8/30/06)

Top Rated Style-Box Derivative – iShares Morningstar Small Cap Core (JKJ 11/6/06)

Top Rated Sector Derivative – iShares Dow Jones Energy (IYE 11/10/06)

Today’s Top “Buy” Recommended Stocks
  1. Alleghany Technologies Inc. (ATI 10/5/06)
  2. RTI International Metals Inc. (RTI 10/11/06)
  3. Daktronics Inc. (DAKT 10/31/06)
  4. Chaparral Steel Co. (CHAP 11/1/06)
  5. The Manitowoc Co. (MTW 8/10/06)
Today’s Top “Sell” Recommended Stocks
  1. Whole Foods Market Inc. (WFMI 11/2/2006)
  2. SanDisk Corp. (SNDK 10/20/06)
  3. The Washington Post Co. (WPO 7/5/06)
  4. Emmis Communications Corp. (EMMS 11/20/06)
  5. Red Robin Gourmet Burgers, Inc. (RRGB 11/2/06)
Today’s Top “Buy” Recommended Fidelity Mutual Funds
  1. Energy Services (FSESX 11/9/06)
  2. Software & Computer (FSCSX 7/27/06)
  3. Natural Gas (FSNGX 11/15/06)
  4. Air Transportation (FSAIX 11/6/06)
  5. Gold (FSAGX 11/21/06)

Wednesday, November 29, 2006

Energy Bulls

I’m still hoping that a rally in the Energy and Natural Resources sectors might be enough to propel the market higher through December. But despite Gordon Gekko, greed is not always good, so I wouldn’t be too aggressive throughout the rest of the year. I do recommend however, taking a serious look at energy and natural resources if you haven’t done so already.

Light Crude recently crossed over its 50-Day moving average and is up today nearly $1.03 a barrel as I write this. I listed several stocks back on November 10th that investors might look to as an energy play. Those companies are included below as well as their performance since November 10th:

  • Veritas DGC Inc. (VTS 1.40%)
  • Oceaneering International Inc. (OII 2.13%)
  • Schlumberger LTD. (SLB 3.74%)
  • World Fuel Services Corp. (INT -2.94%)
  • Rowan Companies Inc. (RDC -3.45%)
  • Dril-Quip Inc. (DRQ 2.79%)
  • Swift Energy Co. (SFY 3.23%)
  • EOG Resources Inc. (EOG 5.20%)
  • Newfield Exploration Co. (NFX 12.38%)
  • Pioneer Natural Resources Co. (PXD 2.30%)
With the S&P 500 up only 0.42% for that time period, and the Wilshire 5000 up slightly more at 0.61%, energy and natural resources are clearly generating alpha.

The inventory report was just released, which bodes well for energy bulls. I’d like to see how our analytic reacts to today’s data before I list a few more potential alpha-generating energy companies.

Short-Term Technical Indicators – The 15-Day Stochastic Indicator for the NASDAQ ended at 65.29 yesterday, well below the 80 point level needed for a shift from bullish to bearish territory. The Breadth and Volume Indicators for the DJIA improved significantly yesterday, as did the On-Balance Volume % of the S&P 500.

On a short-term basis, the indicators are clearly weak, but it’s certainly not cause for alarm just yet. The markets, both domestic and global, were surprisingly resilient yesterday, which lends credence to any remaining momentum.

Long-Term Market Model – Bullish since August 23rd.

Investor Sentiment – Investor sentiment remains mixed ahead of several significant economic reports released throughout the week. Yesterday’s session saw a decrease in both the VIX and the VXN as well as all three Put / Call ratios.

Asset Allocation – 100% invested within the actively-managed, alpha producing portion of the overall portable alpha portfolio.

Beta Exposure and Portable Alpha Generation
Date = Date of AAS “Buy” or “Short/Sell” Recommendation

Top Rated Major Market Derivative – Fidelity NASDAQ Composite (ONEQ 8/30/06)

Top Rated Style-Box Derivative – iShares Morningstar Small Cap Core (JKJ 11/6/06)

Top Rated Sector Derivative – iShares Dow Jones Energy (IYE 11/10/06)

Today’s Top “Buy” Recommended Stocks
  1. RTI International Metals Inc. (RTI 10/11/06)
  2. Daktronics Inc. (DAKT 10/31/06)
  3. Alleghany Technologies Inc. (ATI 10/5/06)
  4. Goldman Sachs Group Inc. (GS 9/12/06)
  5. Chaparral Steel Co. (CHAP 11/1/06)
Today’s Top “Sell” Recommended Stocks
  1. Whole Foods Market Inc. (WFMI 11/2/2006)
  2. The Washington Post Co. (WPO 7/5/06)
  3. Hansen Natural Corp. (HANS 8/4/06)
  4. Emmis Communications Corp. (EMMS 11/20/06)
  5. Red Robin Gourmet Burgers, Inc. (RRGB 11/2/06)
Today’s Top “Buy” Recommended Exchange Traded Funds
  1. iShares FTSE/Xinhua China 25 Index (FXI 8/2/06)
  2. iShares MSCI South Africa Index (EZA 11/10/06)
  3. iShares S&P Latin America 40 Index (ILF 11/1/06)
  4. iShares MSCI Spain Index (EWP 8/4/06)
  5. iShares MSCI Emerging Markets Index (EEM 11/9/06)

Tuesday, November 28, 2006

Bearish Indicators Abound

Short-Term Technical Indicators – All but one of the short-term technical indicators are bearish as a result of yesterday’s sell-off. And the only bullish indicator, the NASDAQ 15-Day Stochastic, is hanging on by the skin of its teeth with a value of 81.80 (the indicator turns bearish when the value crosses from above 80 to below 80).

Long-Term Market Model – Bullish since August 23rd.

Investor Sentiment – The VIX jumped nearly 15% yesterday with the CBOE Volatility Index for the S&P 500 closing over 24% higher than its 52-week low of 9.90, reached just last week.

Asset Allocation – 100% invested within the actively-managed, alpha producing portion of the overall portable alpha portfolio.

Beta Exposure and Portable Alpha Generation
Date = Date of AAS “Buy” or “Short/Sell” Recommendation

Top Rated Major Market Derivative – Fidelity NASDAQ Composite (ONEQ 8/30/06)

Top Rated Style-Box Derivative – iShares Morningstar Mid Cap Core (JKG 11/6/06)

Top Rated Sector Derivative – iShares U.S. Basic Materials (IYM 10/16/06)

Today’s Top “Buy” Recommended Stocks
  1. RTI International Metals Inc. (RTI 10/11/06)
  2. Daktronics Inc. (DAKT 10/31/06)
  3. Alleghany Technologies Inc. (ATI 10/5/06)
  4. Chaparral Steel Co. (CHAP 11/1/06)
  5. F5 Networks Inc. (FFIV 9/20/06)
Today’s Top “Sell” Recommended Stocks
  1. Whole Foods Market Inc. (WFMI 11/2/2006)
  2. Emmis Communications Corp. (EMMS 11/20/06)
  3. Hansen Natural Corp. (HANS 8/4/06)
  4. Red Robin Gourmet Burgers, Inc. (RRGB 11/2/06)
  5. The Washington Post Co. (WPO 7/5/06)
Today’s Top “Buy” Recommended Rydex Mutual Funds
  1. Precious Metals (RYPMX 11/21/06)
  2. Dynamic OTC (RYVYX 8/16/06)
  3. Leisure (RYLIX 9/11/06)
  4. Internet (RYIIX 8/31/06)
  5. Basic Materials (RYBIX 10/10/06)

Monday, November 27, 2006

Is there alpha left in Retail?

With all the hoopla surrounding Black Friday, Wal-Mart (WMT Sell 11/1/06) and the Holiday season, I want to take a look at the retail sector and a few companies generating alpha that might be overlooked.

We use the iShares Dow Jones U.S. Consumer Services Sector ETF (IYC Buy 9/8/06) to represent “retail” in our sector analysis. After a choppy summer, IYC began to trend in late-August fueled by back-to-school and early-bird Christmas shoppers, as well as a mammoth slide in crude prices. Despite a moderate retreat in late-October, the trend has remained bullish and the derivative is up nearly 11% since the date of our “buy” recommendation.

Of the 134 “retail” stocks we analyze for alpha, 37 are “buy” recommended this morning. With less than 28% of the retail stocks “buy” recommended, I am concerned that over-weighting a portfolio with retail securities might be a bit dangerous at this point.

That’s not to say that the sector should be avoided, as there are still plenty of opportunities for alpha in retail. Nintendo, Microsoft and Sony are getting all of the attention with regard to video games, but GameStop Corp. (GME.B Buy 9/5/06), a retailer of video game products and personal computers, is our highest-rated retail company.

Another retail stock worth looking at is AutoZone Inc. (AZO Buy 9/11/06). I’ve listed AZO sporadically in the Top Buy Recommended Stocks section of my blog posts over the last few weeks.

A huge winner over the last week is PayLess Shoe Source (PSS Buy 10/26/06). PSS is up nearly 13% after reporting solid Q3 earnings.

Finally, two retail stocks I find very interesting are Aaron Rents Inc. (RNT Buy 10/27/06) and Tech Data Corp. (TECD Buy 10/5/06). I like these not only because they’re outside of the “Apparel and Shoes” realm, which I’m a bit uneasy about at the moment, but they’re also trading below recent highs.

Short-Term Technical Indicators – The indicators for all three indexes weakened on Friday’s less than stellar session. Volume and Breadth continue to cause concern with regard to the Dow. It also looks as though the MACD is close to crossing below its 9-Day MA, which is another bearish indication. I’m most concerned about the Relative Strength indicator, which declined by over 17% on Friday. All three Stochastic indicators are bullish, but are weakening.

Long-Term Market Model – Bullish since August 23rd.

Investor Sentiment – After jumping higher by nearly 2.5% on Wednesday, the VIX edged up again on Friday by nearly 6% to close at 10.73. This, coupled with an increase in the Put/Call ratio, indicates elevated speculation of a lower moving market.

Of the eleven Investor Sentiment indicators I analyze, six are bullish, three are bearish and two are neutral this morning. Bearish indicators include the % of Bullish Investment Advisors, the VIX, and the Long/Short Commercial Hedges of the S&P 500.

Conversely, the Odd-Lot Short Ratio, the NYSE Short Interest Ratio, the NASDAQ Short Interest Ratio, the Public Specialist Short Ratio, the Put/Call Ratio and the Dividend Yield Spread are all bullish.

Asset Allocation – 100% invested within the actively-managed, alpha producing portion of the overall portable alpha portfolio.

Beta Exposure and Portable Alpha Generation
Date = Date of AAS “Buy” or “Short/Sell” Recommendation

Top Rated Major Market Derivative – Fidelity NASDAQ Composite (ONEQ 8/30/06)

Top Rated Style-Box Derivative – iShares Morningstar Small Cap Core (JKJ 11/6/06)

Top Rated Sector Derivative – iShares NASDAQ Biotechnology (IBB 10/6/06)

Today’s Top “Buy” Recommended Stocks
  1. Daktronics Inc. (DAKT 10/31/06)
  2. RTI International Metals Inc. (RTI 10/11/06)
  3. Alleghany Technologies Inc. (ATI 10/5/06)
  4. Goldman Sachs Group Inc. (GS 9/12/06)
  5. Chaparral Steel Co. (CHAP 11/1/06)
  6. Cyberonics Inc. (CYBX 11/14/06)
  7. F5 Networks Inc. (FFIV 9/20/06)
  8. Harman International Industries Inc. (HAR 10/9/06)
  9. Manitowoc Co. Inc. (MTW 8/14/06)
  10. Volt Information Services Inc. (VOL 11/6/06)
Today’s Top “Sell” Recommended Stocks
  1. Whole Foods Market Inc. (WFMI 11/2/2006)
  2. Red Robin Gourmet Burgers, Inc. (RRGB 11/2/06)
  3. Emmis Communications Corp. (EMMS 11/20/06)
  4. The Washington Post Co. (WPO 7/5/06)
  5. Valassis Communications Inc. (VCI 5/10/06)

Saturday, November 25, 2006

AAS Top Ten on November 17, 2006

The graphs below represent our top rated investments within six different categories as of Friday, November 17, 2006. The analytics we use to rate and select investments are based on a time-weighted alpha rating score that seeks to highlight investments beginning a bullish trend and generating alpha. You can tell from the chart and graphs below that the analytic was correct in all six categories of investments with an average gain of 28.51% since the initial “buy” or “short/sell” recommendation.

We’ve color-coded the graphs to represent one of the three “recommendations” our analytic produces for each security. A red line coincides with a “Short/Sell” recommendation. A blue line represents a “Neutral” or “Hold” recommendation and the green line equates to a “Buy” recommendation.

The green arrow represents the first date that the security became an “AAS Recommended Buy” after previously being an “AAS Recommended Sell.” For the “Short/Sell” group, the red arrow represents the first date that the security became an “AAS Recommended Sell” after previously being “buy” recommended. Also included are the most recent recommendations of each security.

Wednesday, November 22, 2006

Happy Thanksgiving!



Short-Term Technical Indicators – The DJIA 21-Day Volume Ratio and 15-Day Stochastic as well as the S&P 500 On-Balance Volume % slipped slightly yesterday, while the DJIA 21-Day Breadth, MACD and 15-Day Relative Strength indicators improved.

Long-Term Market Model – Bullish since August 23rd.

Investor Sentiment – The VIX closed at 9.90 yesterday, another consecutive 52-week low. The VXN also closed lower at 15.02, but it remains well above its 52-week low of 13.19. All three Put/Call ratios edged higher, indicating that investors are speculating the market will move lower.

Asset Allocation – 100% invested within the actively-managed, alpha producing portion of the overall portable alpha portfolio.

Beta Exposure and Portable Alpha Generation
Date = Date of AAS “Buy” Recommendation

Top Rated Major Market Derivative – Fidelity NASDAQ Composite (ONEQ 8/30/06)

Top Rated Style-Box Derivative – iShares Morningstar Small Cap Core (JKJ 11/6/06)

Top Rated Sector Derivative – iShares Dow Jones U.S. Real Estate (IYR 11/14/06)

Today’s Top “Buy” Recommended Stocks
  1. Daktronics Inc. (DAKT 10/31/06)
  2. RTI International Metals Inc. (RTI 10/11/06)
  3. Alleghany Technologies Inc. (ATI 10/5/06)
  4. Phelps Dodge Corp. (PD 11/20/06)
  5. Chaparral Steel Co. (CHAP 11/1/06)
Today’s Top “Sell” Recommended Stocks
  1. Whole Foods Market Inc. (WFMI 11/2/2006)
  2. Hansen Natural Corp. (HANS 8/4/06)
  3. Red Robin Gourmet Burgers, Inc. (RRGB 11/2/06)
  4. The Washington Post Co. (WPO 7/5/06)
  5. Humana Inc. (HUM 10/30/06)
Today’s Top “Buy” Recommended Exchange Traded Funds
  1. iShares FTSE/Xinhua China 25 Index (FXI 8/2/06)
  2. iShares S&P Latin America 40 Index (ILF 11/1/06)
  3. iShares MSCI South Africa Index (EZA 11/10/06)
  4. Internet HOLDRs (HHH 10/25/06)
  5. streetTRACKS Dow Jones Wilshire REIT (RWR 11/14/06)

Tuesday, November 21, 2006

Change in Routine

Because the Alpha Advisor Service, LLC newsletter is published and released on Tuesday’s and Thursday’s, I’ve decided to change my routine in terms of posting to the Portable Alpha Daily blog on those two days. Analyzing and preparing the newsletter, in addition to writing and posting to the blog, is unfortunately taking too much time. As such, I won’t be writing any detailed commentary on Tuesday’s and Thursdays. However, I’ll still provide everything from the “Short-Term Technical Indicators” on down, and will include commentary on Monday, Wednesday and Friday.

I’ll add a short post-tomorrow, but nothing on Thursday and Friday due to the holiday. Have a Happy Thanksgiving and I’ll see you next Monday morning!

Short-Term Technical Indicators – Improvement in the DJIA 21-Day Breadth and Volume indicators on Monday was off-set by weakness in the 15-Day Stochastic and Relative Strength indicators.
Long-Term Market Model – Bullish since August 23rd.

Investor Sentiment – The VIX closed below 10 (9.97) on Monday for the first time since January 1994, suggesting institutional complacency despite an over-extended market.

Continuing with yesterday’s post, there is a clear dichotomy between our sentiment indicators which are “opinion” based and those that are more quantitative. Most investment surveys, which are designed as contrarian indicators, have bearish readings because of the large percentage of bullish sentiment. Indicators such as these fall into the “opinion-based” category.

But when you look at quantitative indicators such as the Odd-Lot Short Ratio, the Public Specialist Short Ratio, and the Dividend Yield Spread, they all have bullish readings. Indicators such as these, and a few others, carry more weight in our analysis when trying to gauge sentiment.

Asset Allocation – 100% invested within the actively-managed, alpha producing portion of the overall portable alpha portfolio.

Beta Exposure and Portable Alpha Generation
Date = Date of AAS “Buy” or "Short/Sell" Recommendation

Top Rated Major Market Derivative – Fidelity NASDAQ Composite (ONEQ 8/30/06)

Top Rated Style-Box Derivative – iShares Morningstar Small Cap Core (JKJ 11/6/06)

Top Rated Sector Derivative – iShares Dow Jones U.S. Real Estate (IYR 11/14/06)

Today’s Top “Buy” Recommended Stocks
  1. Daktronics Inc. (DAKT 10/31/06)
  2. Phelps Dodge Corp. (PD 11/20/06)
  3. RTI International Metals Inc. (RTI 10/11/06)
  4. F5 Networks Inc. (FFIV 9/20/06)
  5. Goldman Sachs Group Inc. (GS 9/12/06)
Today’s Top “Sell” Recommended Stocks
  1. Whole Foods Market Inc. (WFMI 11/2/2006)
  2. Hansen Natural Corp. (HANS 8/4/06)
  3. Apollo Group Inc. (APOL 10/13/06)
  4. Bausch & Lomb Inc. (BOL 11/8/06)
  5. The Washington Post Co. (WPO 7/5/06)
Today’s Top “Buy” Recommended Rydex Mutual Funds
  1. Dynamic OTC (RYVYX 8/16/06)
  2. Russell 2000 Advantage (RYMKX 11/6/06)
  3. Dynamic S&P 500 (RYTNX 8/3/06)
  4. Internet (RYIIX 8/31/06)
  5. Dynamic Dow (RYCVX 8/11/06)

Monday, November 20, 2006

Alpha in Transports Revisited

I mentioned in Friday’s post that I’d like to see new leadership develop to help propel the rally through the end of the year. It’s difficult for me to pinpoint any one sector as being in position to lead the market. Biotechnology (IBB 10/6/06) has been one of our highest-rated sectors for the last six weeks, but I’m concerned that it might not have the muscle to lead by itself.

Three sectors that I listed as potential leaders were Transports (IYT 11/10/06), Energy (IYE) and Natural Resources (IGE). I’ve discussed alpha in Transports twice over the last month and a half, once on October 6th and again on October 23rd, listing among others Alaska Air Group (ALK 11/13/06) and JetBlue Airways Corp. (JBLU 10/17/06) as “buy” recommended companies. JBLU, as you know, is doing very well, up over 30% since I published the recommendation and nearly 37% since our “buy” recommendation.

We analyze roughly thirty-five transportation companies for alpha each day. As of this morning, twelve are “buy” recommended, fifteen are “neutral” and eight are “short/sell” recommended. Our highest-rated stocks are PACCAR Inc. (PCAR 11/10/06), AirTran Holdings Inc. (AAI 11/15/06) and Trinity Industries Inc. (TRN 10/31/06).

Short-Term Technical Indicators – The 15-Day Relative Strength of the DJIA continued to improve on Friday as did the MACD.

Long-Term Market Model – Bullish since August 23rd.

Investor Sentiment – VIX closed at another 52-week low on Friday with a value of 10.05. A low level of volatility coupled with an increase in the percentage of bullish advisors indicates that investor sentiment is extremely bullish. Used as a contrarian indicator, such optimism and complacency should be viewed as bearish.

One of the guests this morning on CNBC made a very interesting comment suggesting that investor sentiment surveys might now be “contrarian-contrarian indicators.” Investor reverse-psychology, one would think, is hard to quantify and interpret, which is why we don’t over-weigh these surveys in our analysis.

I’m more interested in whether or not institutional investors are “putting their money where their mouths are.” I prefer to use more quantifiable measures such as traditional put/call ratios and volatility indexes as well as commercial hedges when measuring sentiment.

Asset Allocation – 100% invested within the actively-managed, alpha producing portion of the overall portable alpha portfolio.

Beta Exposure and Portable Alpha Generation
Date = Date of AAS “Buy” Recommendation

Top Rated Major Market Derivative – Fidelity NASDAQ Composite (ONEQ 8/30/06)

Top Rated Style-Box Derivative – iShares Morningstar Small Cap Core (JKJ 11/6/06)

Top Rated Sector Derivative – iShares NASDAQ Biotechnology (IBB 10/6/06)

Today’s Top “Buy” Recommended Stocks
  1. RTI International Metals Inc. (RTI 10/11/06)
  2. Daktronics Inc. (DAKT 10/31/06)
  3. F5 Networks Inc. (FFIV 9/20/06)
  4. Chaparral Steel Co. (CHAP 11/1/06)
  5. Goldman Sachs Group Inc. (GS 9/12/06)
  6. Alleghany Technologies Inc. (ATI 10/5/06)
  7. Amazon.com Inc. (AMZN 10/9/06)
  8. Cephalon Inc. (CEPH 10/24/06)
  9. Harman International Ind. Inc. (HAR 10/9/06)
  10. Volt Information Sciences Inc. (VOL 11/6/06)
Today’s Top “Sell” Recommended Stocks (Date of “Short/Sell” Recommendation)
  1. Hansen Natural Corp. (HANS 8/4/06)
  2. Whole Foods Market Inc. (WFMI 11/2/2006)
  3. The Washington Post Co. (WPO 7/5/06)
  4. Intuitive Surgical Inc. (ISRG 10/27/06)
  5. Carpenter Technology Corp. (CRS 10/26/06)

Saturday, November 18, 2006

AAS Top Ten on November 10, 2006

The graphs below represent our top rated investments within six different categories as of Friday, November 10, 2006. The analytics we use to rate and select investments are based on a time-weighted alpha rating score that seeks to highlight investments beginning a bullish trend and generating alpha. You can tell from the chart and graphs below that the analytic was correct in five of the six categories of investments with an average gain of 22.29% since the initial “buy” or “short/sell” recommendation.

We’ve color-coded the graphs to represent one of the three “recommendations” our analytic produces for each security. A red line coincides with a “Short/Sell” recommendation. A blue line represents a “Neutral” or “Hold” recommendation and the green line equates to a “Buy” recommendation.

The green arrow represents the first date that the security became an “AAS Recommended Buy” after previously being an “AAS Recommended Sell.” For the “Short/Sell” group, the red arrow represents the first date that the security became an “AAS Recommended Sell” after previously being “buy” recommended. Also included are the most recent recommendations of each security.

Friday, November 17, 2006

Migrating Markets

I’m paying attention to the Transports (IYT 11/10/06) sector for potential alpha generation. Over the last week, IYT has gained nearly 4.40% and we’ve seen the sector move up in our rankings. It’s hard to tell at this point if this is due to the precipitous slide in crude, if it’s cyclical, or the result of a fundamentally strong economy.

We’ve seen elevated vacillation in our sector analysis this week, which is evident in my blog posts. Although confusing at times, I generally view this as a good thing because it indicates that the market is establishing leadership…or trying to at least. The vision that comes to mind as I write this is the “flying v” formation of geese (whom I loathe) migrating south. There is always one goose in the front, but never indefinitely, and the rest of the flock (or gaggle maybe?) each take turns leading.

When no goose wants to take the lead, the flock stops for a bit, craps all over everything in sight, and then takes off again. Basically the market does the same thing. Tech, Financials, and a few other sectors have done their part to get us here, but new leadership could fuel this rally through the year. Transports maybe? Energy? We'll have to wait to see.

Short-Term Technical Indicators – The DJIA MACD did indeed cross back over its 9-Day MA, which is a bullish indication.

Long-Term Market Model – Bullish since August 23rd.

Investor Sentiment – The VIX closed yesterday at a new 52-week low. Actually, it closed over 1% lower than the previous low of 10.27. But the Put/Call Ratio also decreased, meaning investors are speculating that the market will continue to move higher. Mixing extreme optimism and extreme complacency, ahead of options expiration no less, makes for a very dangerous cocktail.

Asset Allocation – 100% invested within the actively-managed, alpha producing portion of the overall portable alpha portfolio.

Beta Exposure and Portable Alpha Generation
Date = Date of AAS “Buy” Recommendation

Top Rated Major Market Derivative – Fidelity NASDAQ Composite (ONEQ 8/30/06)

Top Rated Style-Box Derivative – iShares Morningstar Small Cap Core (JKJ 11/6/06)

Top Rated Sector Derivative – iShares Dow Jones Transports (IYT 11/10/06)

Today’s Top “Buy” Recommended Stocks
  1. RTI International Metals Inc. (RTI 10/11/06)
  2. Daktronics Inc. (DAKT 10/31/06)
  3. F5 Networks Inc. (FFIV 9/20/06)
  4. Goldman Sachs Group Inc. (GS 9/12/06)
  5. Volt Information Sciences Inc. (VOL 11/6/06)
Today’s Top “Sell” Recommended Stocks (Date of “Short/Sell” Recommendation)
  1. Carpenter Technology Corp. (CRS 10/26/06)
  2. Whole Foods Market Inc. (WFMI 11/2/2006)
  3. Apollo Group Inc. (APOL 10/13/06)
  4. Intuitive Surgical Inc. (ISRG 10/27/06)
  5. Hansen Natural Corp. (HANS 8/4/06)
Today’s Top “Buy” Recommended Profund Mutual Funds
  1. Internet (INPIX 10/24/06)
  2. OTC (UOPIX 8/16/06)
  3. Ultra Small Cap (UAPIX 11/6/06)
  4. Mobile Telecom (WCPIX 10/26/06)
  5. Ultra Mid Cap (UMPIX 11/6/06)

Thursday, November 16, 2006

Daktronics Inc. (DAKT)

I’m slammed this morning so I don’t have time for a detailed post. I did want to point out that Daktronics Inc. (DAKT 10/31/06) jumped ahead of RTI International Metals (RTI 10/11/06) as our top “buy” recommended stock today. A 36.31% gain over the last five days has a tendency to improve a stocks ranking in our analysis. I’d be careful with DAKT though; stocks that hot have a tendency to burn out quickly.

Short-Term Technical Indicators – It looks as though the DJIA MACD is about to cross back over its 9-Day MA, perhaps after today’s close. That will shift the MACD indicator back to a bullish reading. Unfortunately, the Breadth and Volume ratios have quit a bit of ground to cover before they turn bullish.

Long-Term Market Model – Bullish since August 23rd.

Investor Sentiment – VIX is only .04 away from the 52-week low that occurred on 12/23/2005 and screaming “overbought.” The problem is that no one is listening anymore.

Adam, who has as good of an understanding of options and volatility trading as anyone, has been tracking the VIX for awhile now and comments just about daily on it’s continual slide. He’s got a great site for those looking to learn about options and add another element to their investment strategy. Not only that, but he’s entertaining too. Check it out if you haven’t already.


Asset Allocation – 100% invested within the actively-managed, alpha producing portion of the overall portable alpha portfolio.
Beta Exposure and Portable Alpha Generation
Date = Date of AAS “Buy” Recommendation

Top Rated Major Market Derivative – Fidelity NASDAQ Composite (ONEQ 8/30/06)

Top Rated Style-Box Derivative – iShares Morningstar Small Cap Core (JKJ 11/6/06)

Top Rated Sector Derivative – iShares NASDAQ Biotechnology (IBB 10/6/06)

Today’s Top “Buy” Recommended Stocks
  1. Daktronics Inc. (DAKT 10/31/06)
  2. RTI International Metals Inc. (RTI 10/11/06)
  3. F5 Networks Inc. (FFIV 9/20/06)
  4. Volt Information Sciences Inc. (VOL 11/6/06)
  5. Harman International Industries Inc. (HAR 10/9/06)
Today’s Top “Sell” Recommended Stocks (Date of “Short/Sell” Recommendation)
  1. Apollo Group Inc. (APOL 10/13/06)
  2. Whole Foods Market Inc. (WFMI 11/2/2006)
  3. Hansen Natural Corp. (HANS 8/4/06)
  4. Carpenter Technology Corp. (CRS 10/26/06)
  5. Intuitive Surgical Inc. (ISRG 10/27/06)
Today’s Top “Buy” Recommended Fidelity Select Mutual Funds
  1. Software & Computer (FSCSX 7/27/06)
  2. Air Transportation (FSAIX 11/6/06)
  3. Technology (FSPTX 10/9/06)
  4. Nordic (FNORX 10/12/06)
  5. Automotive (FSAVX 10/2/06)