WiserTrader Industries Monthly

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December 2007                          Prescott, Arizona                     Contact Editor

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Contents

 

 

 

Published the 3rd Tuesday of the month        Subscription

 

 

 

 

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   Top-down stock selections are based on finding leading industries in leading sectors with stocks that show growth in market share, earnings and sales.  In this issue two new stocks are added to the portfolio with help from the Dow Jones industry classification system. 

 

. . .  Have a pleasant holiday season and a prosperous new year . . .

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1.0 Top-Down Portfolio

 

     Currently held positions have an average profit of 5.8%.  The gross profit, including closed positions, is 10.88%.  After broker fees, the net profit is 8.0%, as summarized in Table 1A.

 

 

Table 1A

Top-Down Portfolio Performance

December 18, 2007

Top-Down Trading in 2007 ($7000 Initial Capital)

% Initial Capital

Closed trades in 2007 =

8

 

Average Trade Size =

$1,000.00

 

Total Closed Position Share costs =

$8,000.00

 

Gross Profit on Closed Positions =

$352.36

5.0%

Number of Open Positions =

4

 

Cost of Open Positions =

$4,000.00

 

Gross Profit on Open Positions in 2007 =

$408.95

5.8%

Total Gross Profit =

$761.31

10.88%

Broker Commission ($9.99/trade) =

-$199.80

 

Subscription Cost to date =

$0.00

 

Net 2007 Profit After Expenses =

$561.51

8.0%

Cash =

$3,202.90

 

Current Capital =

$7,561.51

 

 

 

     Stocks that survived two successive down trends and high volatility from October through December are listed in Table 1B.  BHP and BRCD closed below their sell stop prices on 11/21 for a 1.9% gain and a 16.2% loss, respectively.  PBR is moved to a hold because its price declined by more than half the trailing stop percentage.  Refer to Section 2 for current trailing stop settings.

 

 

Table 1B

Top-Down Portfolio

November 20, 2007

Stock

Open Date

2007 Open Price

Last Date

Last Price

2007 Gross P/L (%)

Status

Sell stop

PBR

9/18/07

70.60

12/18/07

104.34

47.8%

Hold

93.42

SRP

11/20/07

17.52

12/18/07

16.93

-3.4%

Buy

14.20

TIP

11/20/07

105.87

12/18/07

105.20

-0.6%

Buy

85.98

FXE

11/20/07

148.55

12/18/07

144.25

-2.9%

Buy

119.05

 

 

 

     PBR is a Brazilian stock and SRP is a US stock.  TIP is an inflation-protected US Treasury ETF and FXE is a currency ETF for the Euro.  From Table 3A, the leading sectors over the past month have been basic materials and energy, according to the Yahoo.com classification.  However, Yahoo.com did not update a number of industries last week, forcing us to treat the regular industry tables with a grain of salt. 

 

     According to the Dow Jones classification system, Coal was the leading industry over the past month followed by Consumer Electronics.  Coal is listed as Industrial Metals and Minerals in the Yahoo system and is ranked 20th overall and second in terms of industries that are fastest rising in rank.  For this industry Consol Energy, Inc (CNX) stands out as a leading company due to its size, market share and recent price performance.  These factors make up for its lack of growth in sales and earnings. 

 

     Consumer electronics is listed as Electronics Stores in the Yahoo system where it is ranked 2nd overall.  For this industry, Best Buy Co. Inc. (BBY) was selected.

 

     CNX and BBY are being added to the portfolio.  Details are listed in Table 1C.

 

 

Table 1C

Stock Addition

Company

1 wk

% Chg

1 mo

% Chg

Price

Mkt. Share

Increase

Sales

Growth

Earnings

Growth

Consol Energy, Inc (CNX)

8.7%

34.0%

$67.25

-0.7%

-2.5%

-29.7%

Best Buy Co. Inc. (BBY)

1.3%

10.9%

$51.62

1.9%

16.5%

22.7%

 

 

 

2.0 Portfolio Sell Stop Settings

 

     When a stock’s price declines from its highest price by half the trailing stop percentage, its status is moved to a hold.  Hold status means continue to hold it but don’t add to the position.

 

     Trailing stop percentage (Tsp) for WiserTrader portfolios 

 

     1. When the stock price remains within 20% of the buy price,

·        Tsp = -20%.

 

     2. When the stock price is greater than 20% of the buy price,

·        Tsp is the wider of  -20% or

 

                 , a negative percentage.

 

o       f is the fraction of gains given back,

§         Bullish, f = 0.5 as when S&P 500 is above its SMA 30

§         Cautious, f = 0.333 as when S&P 500 is below its SMA 30

§         Bearish, f = 0.25 as when S&P 500 SMA 30 slope turns negative

o       PBUY is the buy price and

o       PMAX is the maximum price reached.

 

 3. The sell stop price PSELL is,

 

              

 

Current Status:  Bearish,  f = 0.25

The S&P 500 is currently below its SMA 30. 

The S&P 500 SMA 30 slope is currently negative. 

     

    These settings are designed at worst to, (1) take a 20% loss, (2) break even when there is a 20% maximum gain and (3) walk away with at least half of the gain greater than 20%.  At the same time the stock price is given room to vary.  Deviations from these settings are possible.

 

 

 

3.0 Leading Sectors and Industries for December

 

     Sector and industry rankings are determined by the percent increase in industry composite index values over the previous 4 weeks.  Industry rank ranges from a high of 1 to a low of 215 based on a list of 215 industries in the Yahoo Finance industry classification system.  Sectors rankings based on the average of their industry rankings are listed in Table 3A.  The best performing sectors this month were basic materials and energy. 

 

 

Table 3A

Sector Rank

Rank

Sector

Average 4-Week

% Change

Average Industry Rank

1

Basic Materials

3.5%

68

2

Energy

2.3%

83

3

Industrial Goods

1.5%

93

4

Consumer Noncyclical

1.4%

94

5

Technology

1.1%

102

6

Consumer Cyclical

0.8%

107

7

Utilities

0.3%

118

8

Healthcare

0.3%

100

9

Financial

0.0%

121

10

Services

-0.2%

123

11

Conglomerates

-0.4%

137

12

Transportation

-0.6%

118

 

 

     The leading industries for the past month are ranked in Table 3B.  The leftmost column is the rank based on the previous 4-week percentage change.  The second column from the left is ranked by the number of positions an industry is above or below its 4-week average rank.  The third column from the left is the average of the first two columns.  Clicking on the industry name takes you to an industry summary page.  The “C’s” will display the companies in the industry.  The last three columns on the right are the percentage gains for the previous trading day, the previous week and the previous four weeks.

 

 

 Table 3B

Leading Industries

December 18, 2007

Rank [R]

Rank of Change   [C]

(R+C)/2

Industries

Companies

Last Gain

1 wk Ago Gain

1 mo Gain

1

32

17

Nonmetallic Mineral Mining

C's

-1.1%

-0.8%

14.1%

2

74

38

Electronics Stores

C's

1.7%

1.2%

9.7%

3

61

32

Agricultural Chemicals

C's

-0.8%

-2.4%

9.0%

4

48

26

Investment Brokerage - Regional

C's

1.2%

-1.8%

8.9%

5

81

43

Farm Products

C's

0.2%

3.2%

8.6%

6

52

29

Semiconductor - Specialized

C's

2.2%

0.6%

8.1%

7

1

4

General Contractors

C's

2.3%

-0.4%

8.0%

8

97

53

Internet Service Providers

C's

3.8%

-3.0%

7.8%

9

10

10

Metal Fabrication

C's

0.8%

-3.2%

7.7%

10

15

13

Beverages - Brewers

C's

0.8%

0.2%

7.6%

11

44

28

Catalog & Mail Order Houses

C's

1.0%

-2.0%

7.5%

12

26

19

Regional - Southeast Banks

C's

1.5%

0.7%

7.2%

13

103

58

Cleaning Products

C's

0.9%

0.4%

6.9%

14

25

20

Chemicals - Major Diversified

C's

0.8%

-0.4%

6.8%

15

65

40

Auto Dealerships

C's

0.6%

-0.1%

6.8%

16

47

32

Steel & Iron

C's

2.1%

-2.4%

6.1%

17

22

20

Specialty Chemicals

C's

1.0%

-1.0%

6.1%

18

14

16

Heavy Construction

C's

0.5%

-4.1%

6.0%

19

102

61