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WiserTrader Industries Monthly |
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April 2008 Prescott, Arizona Contact Editor __________________________________________________________________________
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Published the 3rd Tuesday of the month Subscription to Weekly Newsletter
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Table 1A
Top-Down Portfolio Performance
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Top-Down Trading in 2008 ($7809.07 Initial Capital) |
% Initial Capital |
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Closed trades in 2008 = |
8 |
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Average Trade Size = |
$1,000.00 |
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Total Closed Position Share costs = |
$8,000.00 |
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Gross Profit on Closed Positions = |
-$694.94 |
-8.90% |
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Number of Open Positions = |
6 |
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Cost of Open Positions = |
$6,000.00 |
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Gross Profit on Open Positions in 2008 = |
$133.67 |
1.71% |
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Total Gross Profit = |
-$561.26 |
-7.19% |
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Broker Commission ($9.99/trade) = |
-$159.84 |
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Subscription Cost to date = |
$0.00 |
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Net 2008 Profit After Expenses = |
-$721.10 |
-9.23% |
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Cash = |
$1,097.14 |
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Current Capital = |
$7,087.97 |
4/15/08 |
* includes stocks bought in 2007 and sold in 2008
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Current stocks are listed in Table 1B. Stop loss settings are explained in Section 2.
Alerts: None.
Past Additions:
iShares Lehman TIPS Bond (NYSE: TIP) is an inflation-protected US Treasury ETF.
CurrencyShares Euro Trust (NYSE: FXE) is a currency ETF for the Euro.
CurrencyShares Australian Dollar Trust (NYSE: FXA) is a currency ETF for the Australian dollar.
Currency Shares Swiss Franc Trust (NYSE: FXF) is a currency ETF for the Swiss Franc.
Currency Shares Japanese Yen Trust (NYSE: FXY) is a currency ETF for the Japanese Yen.
Neflix, Inc. (NASDAQ: NFLX) provides online movie rental subscription services in the United States.
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Table 1B
Top-Down Portfolio
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Top - Down Portfolio |
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As of Market close on |
4/15/08 |
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Stock |
Begin Date |
Begin Price |
Last Date |
Last Price |
Gross P/L (%) |
Status |
Sell stop |
Metrics |
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CNX |
12/31/07 |
71.52 |
1/4/08 |
65.48 |
-8.4% |
closed |
66.22 |
Growth |
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BBY |
12/31/07 |
52.51 |
1/4/08 |
47.48 |
-9.6% |
closed |
48.04 |
Growth |
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PBR |
12/31/07 |
115.24 |
1/16/08 |
98.09 |
-14.9% |
closed |
106.93 |
Growth |
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SRP |
12/31/07 |
16.98 |
1/22/08 |
14.90 |
-12.2% |
closed |
15.28 |
Defensive |
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CPD |
1/16/08 |
17.00 |
1/28/08 |
15.27 |
-10.2% |
closed |
15.30 |
Defensive |
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ACH |
2/19/08 |
45.26 |
3/6/08 |
45.71 |
1.0% |
closed |
46.91 |
Growth |
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POT |
2/19/08 |
152.50 |
3/10/08 |
143.03 |
-6.2% |
closed |
147.85 |
Growth |
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BHP |
2/19/08 |
72.66 |
3/10/08 |
66.16 |
-8.9% |
closed |
68.18 |
Growth |
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TIP |
12/31/07 |
105.26 |
4/15/08 |
108.78 |
3.3% |
Buy |
89.22 |
Defensive |
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FXE |
12/31/07 |
146.40 |
4/15/08 |
157.96 |
7.9% |
Buy |
126.98 |
Defensive |
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FXA |
02/19/08 |
92.34 |
4/15/08 |
92.62 |
0.3% |
Buy |
76.40 |
Defensive |
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FXF |
03/18/08 |
99.85 |
4/15/08 |
99.42 |
-0.4% |
Buy |
80.90 |
Defensive |
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FXY |
03/18/08 |
100.30 |
4/15/08 |
98.32 |
-2.0% |
Buy |
80.70 |
Defensive |
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NFLX |
03/18/08 |
35.00 |
4/15/08 |
36.48 |
4.2% |
Buy |
30.54 |
Growth |
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Trailing Stop Settings are Bullish |
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Tspi (long) = -20% |
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Net capital for 2008 = |
-9.2% |
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f (long) = 50% |
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The market has been moving sideways for the past three months. For the sectors charted in Figure 1A, only energy showed positive movement over the past week. The energy sector has also been the leader over the past month, as shown in Table 1C.
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FIGURE 1A
Table 1C
Sector Rank
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Sector * |
1 wk |
1 mo |
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Energy |
2.0% |
10.1% |
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Industrial Goods |
-2.4% |
7.4% |
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Basic Materials |
-0.4% |
6.3% |
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Transportation |
-4.3% |
5.8% |
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Technology |
-2.7% |
5.1% |
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Financial |
-3.6% |
5.1% |
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Consumer Noncyclical |
-0.2% |
4.9% |
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Healthcare |
-2.7% |
4.6% |
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Services |
-3.5% |
4.5% |
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Utilities |
-0.3% |
3.7% |
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Consumer Cyclical |
-3.7% |
2.8% |
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Conglomerates |
-8.2% |
-2.2% |
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The energy sector in this classification system consists of oil and gas industries. Other energy related stocks such as solar are found under specialized semiconductors. Coal is found under mineral mining industries. ETF’s are a good general way to invest in this energy sector. ETF’s smooth out some of the volatility found in individual stocks. Of course that does not mean they do not respond to the volatility of oil and gas prices. They do indeed.
Within the oil & gas domain there are several choices. Three are chosen here for their respectable average daily volume and are charted in Figure 1B.
Oil Services HOLDRs (AMEX: OIH) diversifies across 18 companies in the oil service industry. Principal holdings accounting for 80% are: Baker Hughes (7.95%), Diamond Offshore (7.47%), Halliburton (9.48%), Nabors (4.26%), National Oil Well (4.9%) Noble Corp (6.08%), Schlumberger (10.7%), Smith International ((5.67%), Transocean (18.18%) and Weatherford Intl (6.98%).
United States Oil (AMEX: USO) seeks to reflect the performance, less expenses, of the spot price of West Texas Intermediate (WTI) light, sweet crude oil. The fund will invest in futures contracts for WTI light, sweet crude oil, other types of crude oil, heating oil, gasoline, natural gas and other petroleum based-fuels that are traded on exchanges. It may also invest in other oil interests such as cash-settled options on oil futures contracts, forward contracts for oil, and OTC transactions that are based on the price of oil.
iShares Dow Jones US Energy (NYSE: IYE) seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Oil & Gas index which measures the performance of the oil and gas sector of the U.S. equity market. The top 10 holdings are: Anadarko Petroleum (2.48%), Apache Corp (3.14%), Chevron (14.59%), Conoco Philips (4.4%), Devon Energy (3.57%), EOG Resources (2.62%), Exxon Mobil (23.09%), Occidental Petroleum (4.88%) Schlumberger (6.54%) and Transocean (2.49%).
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FIGURE 1B
2.0 Portfolio Sell Stop Settings
The trailing stop percentage TSP for WiserTrader portfolios has been adjusted for accuracy and flexibility in keeping with the original intent. When stocks are bought in a bullish market, an initial trailing stop percentage TSPI = -20% is just about right. However, the market can change. A -20% trailing stop is too wide when the market turns bearish and a -10% trailing stop is too narrow when the market is bullish. Also, there is the feeling that when profits grow beyond 40% (and we have seen several of these), a stock should have a progressively wider trailing stop. So a 40% profit acts as a kind of transition point. Each of these considerations is described graphically in Figure 2A for long positions. The solid lines indicate the TSP for bullish, cautious and bearish market conditions.
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FIGURE 2A
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1. When the stock price remains within 40% of the buy price, the initial trailing stop percentage TSPI varies according to market conditions. For a long position,
· Bullish, TSPI = -20%, as when the S&P 500 is above its SMA 30 · Cautious, TSPI = -15%, as when the S&P 500 is below its SMA 30 · Bearish, TSPI = -10%, as when the S&P 500 SMA 30 slope is negative
2. For a long position, when the maximum stock price is 40% or more greater than the buy price, · TSP is the wider of TSPI or
o f is the fraction of gains placed at risk, § Bullish, f = 0.5, as when the S&P 500 is above its SMA 30 § Cautious, f = 0.375, as when the S&P 500 is below its SMA 30 § Bearish, f = 0.25, as when the S&P 500 SMA 30 slope is negative o PBUY is the buy price and o PMAX is the maximum price reached.
3. The sell stop price PSELL is,
Current Settings: Bullish The S&P 500 is currently above its SMA 30. The S&P 500 SMA 30 slope is currently positive.
Note: The signs for TSP and TSP1 are negative for long positions and positive for short positions.
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 a 40% or greater maximum gain. At the same time the stock price is given room to vary. Deviations from these settings for individual stocks are possible when their industry undergoes unusual activity.
If you follow these portfolios, keep in mind that they are only benchmarks which can not be matched exactly because of the round numbers used. Entry prices are taken from the previous close and exit prices are taken from the close on the day that trailing stops are triggered. You can either sell as soon as a trailing stop is triggered or wait until after the close and try to get better prices over the next few days. Once out of a position, a stock is set aside for a period of about two months.
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Table 3A
Leading Industries
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Rank |
Relative To Avg |
Rank of Change |
Leading Industries |
Last |
1 wk Ago Gain |
1 mo Gain |
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1 |
31 |
48 |
Metal Fabrication |
0.3% |
0.0% |
19.9% |
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2 |
128 |
4 |
Industrial Metals & Minerals |
3.1% |
1.0% |
18.2% |
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3 |
64 |
28 |
Nonmetallic Mineral Mining |
1.5% |
4.2% |
17.5% |
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4 |
136 |
2 |
Oil & Gas Drilling & Exploration |
0.7% |
6.2% |
16.5% |