WiserTrader Industries Monthly

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July 2008                          Prescott, Arizona                     Contact Editor

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Contents

• Portfolio
• Trailing Stop Settings
• Leading Sectors and Industries
• Industries Rising in Rank
• Industries Falling in Rank
• Lagging Industries

Published the 3^rd Tuesday of the month     

Subscription to Weekly Newsletter

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Top-down stock selections are normally based on leading industries in leading sectors with a focus on stocks that show growth in market share, earnings and sales.    

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1.0 Top-Down Portfolio

     The portfolio is shown in Table 1A.

Table 1A

Top-Down Portfolio

Top - Down Portfolio Open Positions						As of Market close on		7/15/08
Stock	Begin Date	Begin Price	Last Date	Last Price	Gross P/L (%)	Status	Sell stop	Metrics
TIP	12/31/07	104.12	7/15/08	108.41	4.1%	Buy	99.28	Defensive
USO	05/20/08	104.30	7/15/08	112.19	7.6%	Buy	105.73	Growth
Trailing Stop Settings are Bearish							Tspi (long) = -10%
Net capital for 2008 =			-18.7%				f (long) = 25%

Current Holdings:

iShares Lehman TIPS Bond (NYSE: TIP) is an inflation-protected US Treasury ETF.

     Over recent weeks it appears that energy stocks are not pegged to the dollar as much as thought.  So three energy positions are being restored to the portfolio.

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.

Alerts: . . . none

Since the last issue, six positions listed at the bottom of Table 1B were closed as commodities sold off.  Stop loss settings are explained in Section 2. 

Table 1B

Closed Positions

Top - Down Portfolio Closed Positions						As of Market close on		7/15/08
Stock	Begin Date	Begin Price	Last Date	Last Price	Gross P/L (%)	Status	Sell stop	Metrics
CNX	12/31/07	71.52	1/4/08	65.48	-8.4%	closed	66.22	Growth
BBY	12/31/07	52.51	1/4/08	47.48	-9.6%	closed	48.04	Growth
PBR	12/31/07	115.24	1/16/08	98.09	-14.9%	closed	106.93	Growth
SRP	12/31/07	16.98	1/22/08	14.90	-12.2%	closed	15.28	Defensive
CPD	1/16/08	17.00	1/28/08	15.27	-10.2%	closed	15.30	Defensive
ACH	2/19/08	45.26	3/6/08	45.71	1.0%	closed	46.91	Growth
POT	2/19/08	152.50	3/10/08	143.03	-6.2%	closed	147.85	Growth
BHP	2/19/08	72.66	3/10/08	66.16	-8.9%	closed	68.18	Growth
NFLX	3/18/08	35.00	4/22/08	30.00	-14.3%	closed	32.56	Growth
FXE	12/31/07	146.40	5/1/08	154.66	5.6%	closed	128.08	Defensive
FXA	2/19/08	92.34	5/1/08	93.49	1.2%	closed	76.40	Defensive
FXF	3/18/08	99.85	5/1/08	95.16	-4.7%	closed	80.90	Defensive
FXY	3/18/08	100.30	5/1/08	95.50	-4.8%	closed	80.70	Defensive
IYE	4/15/08	138.54	5/1/08	139.32	0.6%	closed	117.42	Growth
OIH	4/15/08	190.73	5/1/08	191.77	0.5%	closed	166.13	Growth
USO	4/15/08	91.44	5/1/08	90.38	-1.2%	closed	76.55	Growth
MOS	6/17/08	161.08	6/24/08	142.98	-11.2%	closed	144.97	Growth
TRA	6/17/08	55.10	6/25/08	48.87	-11.3%	closed	49.59	Growth
X	5/20/08	184.02	7/2/08	153.40	-16.6%	closed	172.76	Growth
AGU	6/17/08	110.99	7/2/08	99.75	-10.1%	closed	101.21	Growth
IYE	5/20/08	155.25	7/9/08	138.11	-11.0%	closed	139.73	Growth
OIH	5/20/08	218.22	7/9/08	200.46	-8.1%	closed	201.79	Growth

     The overall performance is shown in Table 1C.

Table 1C

Top-Down Portfolio Performance

Top-Down Trading in 2008 ($9809.07 Initial Capital)		% Initial Capital
Closed trades in 2008 =	22
Average Trade Size =	$1,000.00
Total Closed Position Share costs =	$22,000.00
Gross Profit on Closed Positions =	-$1,549.14	-15.79%
Number of Open Positions =	2
Cost of Open Positions =	$2,000.00
Gross Profit on Open Positions in 2008 =	$116.85	1.19%
Total Gross Profit =	-$1,432.29	-14.60%
Broker Commission ($9.99/trade) =	-$399.60
Subscription Cost to date =	$0.00
Net 2008 Profit After Expenses =	-$1,831.89	-18.68%
Cash =	$6,259.93
Current Capital =	$7,977.18	7/15/08

     The market has reacted negatively to the rise in oil prices and financial weakness, as seen in Figure 1A.  All major sectors declined for the month.  Essentially there are no sector leaders to the up side for the month, as seen in Table 1D.  Healthcare has the least amount of down side. 

FIGURE 1A

Table 1D

Sector Rank

Rank	Sector	Last	1 wk	1 mo
1	Healthcare	0.9%	1.0%	-3.9%
2	Energy	-3.5%	-0.6%	-5.0%
3	Utilities	-1.1%	-0.5%	-6.5%
4	Basic Materials	-2.1%	2.2%	-6.9%
5	Conglomerates	-1.8%	0.0%	-7.5%
6	Consumer Noncyclical	0.1%	-0.8%	-9.0%
7	Transportation	-0.6%	0.1%	-10.6%
8	Technology	-0.3%	-2.5%	-11.1%
9	Industrial Goods	-1.2%	-0.9%	-13.3%
10	Consumer Cyclical	0.2%	-2.3%	-13.6%
11	Services	-0.2%	-2.4%	-13.7%
12	Financial	-1.7%	-4.4%	-18.0%

New Addition:

     This month’s selection is from the home healthcare industry.  It is ranked 7^th out of 215 industries.

Amedisys Inc. (NASDAQ: AMED) provides home health and hospice services.  It is being added to the portfolio with a 10% trailing stop due to current bearish market conditions.

2.0 Portfolio Trailing Stop Settings

          Updated 4/21/08 –

The trailing stop percentage T_SP for WiserTrader portfolios is described below.  When stocks are bought in a bullish market, an initial trailing stop percentage T_SPI = -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 a certain level, say 65%, a stock should have a progressively wider trailing stop.  So a 65% profit acts as a new transition point.  These considerations are described graphically in Figure 2A for long positions.  The lines indicate the T_SP for bullish, cautious and bearish market conditions.

FIGURE 2A

1. When the maximum percentage profit P_MAX% is less than 65%, the initial trailing stop percentage T_SPi is a fixed value that depends on market conditions.  For a long position,

· Bullish, T_SPi = -20%, as when the S&P 500 is above its SMA 30

· Cautious, T_SPi = -15%,  as when the S&P 500 is below its SMA 30

· Bearish, T_SPi = -10%, as when the S&P 500 SMA 30 slope is negative

     2. For a long position, when P_MAX%  is 65% or more greater than the buy price,

· T_SP varies according to,

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 P_MAX% = (P_MAX  - P_BUY) / P_BUY

o P_MAX is the maximum price reached and

o P_BUY is the buy price

Note: The signs for T_SP and T_SPi are negative for long positions and positive for short positions.  For short positions the maximum price reached is replaced by the minimum price reached.

 3. The sell stop price P_SELL is,

Current Settings:  Bearish

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

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

	S&P > SMA30 SMA30 slope >0		S&P < SMA30 SMA30 slope >0		S&P < SMA30 SMA30 slope <0		S&P > SMA30 SMA30 slope <0
	Bullish	Bullish	Cautious	Cautious	Bearish	Bearish	Bearish	Cautious
	Long	Short	Long	Short	Long	Short	Long	Short
TSPi	-20%	10%	-15%	15%	-10%	20%	-10%	15%
f	0.5	0.25	0.375	0.375	0.25	0.5	0.25	0.375

    The 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 65% 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. 

3.0 Leading Industries

     The leading industries for the past month are ranked in Table 3A.  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 3A

Leading Industries

Rank [R]	Rank of Change   [C]	(R+C)/2	Industries	Companies	Last Gain	1 wk Gain	1 mo Gain
1	20	11	Gold	C's	-2.3%	9.5%	18.1%
2	1	2	Business Services	C's	8.1%	27.3%	11.1%
3	98	51	Drug Delivery	C's	0.8%	0.7%	11.0%
4	3	4	Silver	C's	-2.9%	9.8%	8.4%
5	44	25	Drug Manufacturers - Major	C's	1.0%	1.6%	5.6%
6	76	41	Biotechnology	C's	3.2%	2.1%	4.6%
7	115	61	Home Health Care	C's	1.3%	6.1%	4.5%
8	21	15	Computer Based Systems	C's	0.5%	-1.5%	0.9%
9	51	30	Drugs - Generic	C's	1.4%	2.9%	0.9%
10	22	16	Cigarettes	C's	-0.7%	2.1%	0.5%
11	49	30	Diagnostic Substances	C's	1.1%	4.1%	0.4%
12	47	30	Beverages - Brewers	C's	-0.1%	5.1%	-0.2%
13	97	55	Long Distance Carriers	C's	2.3%	0.5%	-0.2%
14	63	39	Drug Manufacturers - Other	C's	0.4%	0.3%	-0.7%
15	16	16	Independent Oil & Gas	C's	-4.7%	-0.3%	-0.9%
16	64	40	Oil & Gas Equipment & Services	C's	-4.4%	1.8%	-1.2%
17	92	55	Medical Appliances & Equipment	C's	1.2%	2.4%	-1.5%
18	10	14	Personal Computers	C's	-1.4%	-1.3%	-1.6%
19	78	49	Medical Instruments & Supplies	C's	1.5%	1.2%	-1.7%
20	2	11	Railroads	C's	-2.8%	3.5%	-1.7%
21	12	17	Telecom Services - Foreign	C's	-1.0%	0.2%	-2.1%
22	72	47	Research Services	C's	0.9%	1.2%	-2.2%
23	87	55	Wholesale, Other	C's	-0.7%	-0.7%	-2.7%
24	26	25	Cleaning Products	C's	-0.3%	1.5%	-3.0%
25	108	67	Confectioners	C's	-1.3%	-2.7%	-3.1%
26	7	17	Hospitals	C's	0.1%	0.6%	-3.2%
27	85	56	Processed & Packaged Goods	C's	0.4%	-0.2%	-3.2%
28	66	47	Gas Utilities	C's	-1.2%	1.4%	-3.3%
29	41	35	Trucking	C's	0.2%	1.0%	-3.3%
30	52	41	Drug Related Products	C's	1.1%	4.4%	-3.5%
31	99	65	Medical Laboratories & Research	C's	0.1%	1.1%	-3.5%
32	161	97	Education & Training Services	C's	1.4%	-2.7%	-3.7%
33	95	64	Personal Services	C's	1.0%	0.6%	-3.8%
34	158	96	Diversified Utilities	C's	-0.5%	-0.8%	-4.0%
35	123	79	Personal Products	C's	-0.1%	0.6%	-4.1%
36	31	34	Food - Major Diversified	C's	0.1%	1.3%	-4.3%
37	8	23	Wireless Communications	C's	-0.4%	-1.6%	-4.3%
38	86	62	Management Services	C's	-0.4%	-0.7%	-4.4%
39	91	65	Specialized Health Services	C's	-0.6%	-0.2%	-4.4%
40	19	30	Telecom Services - Domestic	C's	-0.7%	-1.0%	-4.6%

     Percentage gains for the top 20 leading industries are plotted in Figure 3A.

FIGURE 3A

4.0 Industries Rising in Rank

     Table 4A contains the industries that are moving up in position the fastest.  The 20 fastest rising in rank are plotted in Figure 4A.

 Table 4A

Industries Advancing in Rank the Fastest

Rank [R]	Rank of Change   [C]	(R+C)/2	Industries	Companies	Last Gain	1 wk Gain	1 mo Gain
2	1	2	Business Services	C's	8.1%	27.3%	11.1%
20	2	11	Railroads	C's	-2.8%	3.5%	-1.7%
4	3	4	Silver	C's	-2.9%	9.8%	8.4%
47	4	26	Shipping	C's	-1.2%	3.0%	-5.6%
68	5	37	Meat Products	C's	3.3%	4.8%	-8.8%
71	6	39	Foreign Utilities	C's	-1.4%	0.5%	-8.9%
26	7	17	Hospitals	C's	0.1%	0.6%	-3.2%
37	8	23	Wireless Communications	C's	-0.4%	-1.6%	-4.3%
51	9	30	Medical Equipment Wholesale	C's	1.0%	2.5%	-5.9%
18	10	14	Personal Computers	C's	-1.4%	-1.3%	-1.6%
128	11	70	Consumer Services	C's	-0.2%	1.9%	-13.2%
21	12	17	Telecom Services - Foreign	C's	-1.0%	0.2%	-2.1%
95	13	54	Foreign Money Center Banks	C's	-3.1%	1.4%	-10.6%
65	14	40	Aerospace/Defense Products & Services	C's	-1.0%	-0.8%	-8.3%
130	15	73	Aluminum	C's	-1.8%	3.8%	-13.3%
15	16	16	Independent Oil & Gas	C's	-4.7%	-0.3%	-0.9%
69	17	43	Internet Information Providers	C's	-1.6%	-4.5%	-8.9%
76	18	47	Diversified Machinery	C's	-2.2%	0.8%	-9.2%
40	19	30	Telecom Services - Domestic	C's	-0.7%	-1.0%	-4.6%
1	20	11	Gold	C's	-2.3%	9.5%	18.1%
9	24	17	Computer Based Systems	C's	0.5%	-1.5%	0.9%
10	21	16	Cigarettes	C's	-0.7%	2.1%	0.5%
100	22	61	Industrial Equipment & Components	C's	-2.4%	1.0%	-10.9%
80	23	52	Security & Protection Services	C's	-1.6%	-1.3%	-9.5%
109	25	67	Publishing - Newspapers	C's	-1.4%	-3.7%	-42.5%
24	26	25	Cleaning Products	C's	-0.3%	1.5%	-3.0%
81	27	54	Chemicals - Major Diversified	C's	0.3%	1.9%	-9.5%
56	28	42	Auto Parts Stores	C's	-1.8%	-0.7%	-6.8%
72	29	51	Drug Stores	C's	-0.3%	0.4%	-9.0%
108	30	69	Aerospace/Defense - Major Diversified	C's	0.7%	-1.4%	-11.6%
36	32	34	Food - Major Diversified	C's	0.1%	1.3%	-4.3%
52	33	43	Food Wholesale	C's	0.4%	2.6%	-6.3%
63	34	49	Conglomerates	C's	-1.8%	0.0%	-7.5%
55	35	45	Steel & Iron	C's	-2.8%	2.0%	-6.8%
129	31	80	Home Furnishing Stores	C's	0.6%	-5.3%	-13.3%
125	36	81	Semiconductor - Specialized	C's	-0.7%	2.6%	-12.9%
91	37	64	Communication Equipment	C's	-0.6%	0.2%	-10.5%
127	38	83	Packaging & Containers	C's	0.0%	0.0%	-13.2%
93	39	66	REIT - Healthcare Facilities	C's	0.2%	1.4%	-10.5%
149	40	95	Building Materials Wholesale	C's	0.2%	-1.8%	-14.7%

FIGURE 4A

5.0 Industries Falling in Rank

     A list of the industries declining in rank the fastest is given in Table 5A.  The 20 fastest declining in rank are plotted in Figure 5A.

 Table 5A

Industries Declining in Rank the Fastest

Rank [R]	Rank of Change   [C]	(R+C)/2	Industries	Companies	Last Gain	1 wk Gain	1 mo Gain
205	176	191	Toy & Hobby Stores	C's	-0.3%	-1.5%	-25.9%
88	175	132	Oil & Gas Refining & Marketing	C's	-3.5%	-2.7%	-10.4%
138	177	158	Dairy Products	C's	-0.4%	0.2%	-13.9%
153	178	166	REIT - Industrial	C's	0.1%	-3.2%	-15.1%
45	179	112	Nonmetallic Mineral Mining	C's	-3.3%	4.2%	-5.5%
151	180	166	Music & Video Stores	C's	0.0%	-3.9%	-14.8%
180	181	181	Sporting Activities	C's	-0.7%	-4.1%	-19.9%
107	182	145	Publishing - Periodicals	C's	-0.7%	-7.1%	-11.5%
97	183	140	Closed-End Fund - Equity	C's	-2.5%	-1.6%	-10.7%
75	184	130	Information Technology Services	C's	-1.2%	-4.2%	-9.1%
160	185	173	Housewares & Accessories	C's	0.3%	-2.9%	-16.5%
103	187	145	Security Software & Services	C's	0.2%	-3.1%	-11.1%
111	188	150	Synthetics	C's	-1.0%	2.1%	-11.8%
83	186	135	General Contractors	C's	-2.2%	0.8%	-9.8%
66	189	128	Healthcare Information Services	C's	-0.5%	-0.5%	-8.4%
126	190	158	Auto Manufacturers - Major	C's	-1.3%	-2.8%	-12.9%
200	191	196	Investment Brokerage - Regional	C's	-1.2%	-3.5%	-24.1%
161	192	177	Apparel Stores	C's	-0.3%	-6.7%	-16.6%
148	193	171	Basic Materials Wholesale	C's	-0.1%	-0.8%	-14.7%
172	194	183	Networking & Communication Devices	C's	-1.0%	-5.2%	-18.2%
85	195	140	Movie Production, Theaters	C's	0.8%	-0.9%	-10.1%
167	196	182	Regional - Northeast Banks	C's	1.8%	-4.9%	-17.5%
122	197	160	Semiconductor Equipment & Materials	C's	0.9%	-4.9%	-12.7%
176	198	187	Textile - Apparel Footwear & Accessories	C's	2.7%	-3.6%	-18.9%
140	199	170	Property & Casualty Insurance	C's	-2.5%	-4.5%	-14.1%
86	200	143	Printed Circuit Boards	C's	-0.1%	-1.8%	-10.1%
152	201	177	Farm Products	C's	-2.4%	-4.1%	-14.9%
189	202	196	Asset Management	C's	-1.9%	-6.0%	-21.4%
194	203	199	Long-Term Care Facilities	C's	0.7%	-4.6%	-22.2%
156	204	180	Diversified Investments	C's	-1.1%	-3.1%	-15.7%
171	205	188	Data Storage Devices	C's	-0.2%	-9.3%	-18.1%
133	206	170	Regional Airlines	C's	1.3%	-0.8%	-13.7%
196	207	202	Technical & System Software	C's	-0.6%	-9.6%	-22.9%
136	208	172	Publishing - Books	C's	-0.6%	-3.2%	-13.7%
99	209	154	Water Utilities	C's	-2.1%	-3.5%	-10.8%
101	210	156	Application Software	C's	2.0%	-2.9%	-10.9%