WiserTrader Industries Monthly

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March 2008                          Prescott, Arizona                     Contact Editor

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Contents

• Portfolio
• Sell 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 activity is shown for 2008 in Table 1A, including broker fees. 

Table 1A

Top-Down Portfolio Performance

Top-Down Trading in 2008 ($7809.07 Initial Capital)		% Initial Capital
Closed trades in 2008 =	8
Average Trade Size =	$1,000.00
Total Closed Position Share costs =	$8,000.00
Gross Profit on Closed Positions =	-$694.94	-8.90%
Number of Open Positions =	3
Cost of Open Positions =	$3,000.00
Gross Profit on Open Positions in 2008 =	$119.49	1.53%
Total Gross Profit =	-$575.45	-7.37%
Broker Commission ($9.99/trade) =	-$129.87
Subscription Cost to date =	$0.00
Net 2008 Profit After Expenses =	-$705.32	-9.03%
Cash =	$4,097.14
Current Capital =	$7,103.75	3/18/08

 * includes stocks bought in 2007 and sold in 2008

     Since last month 3 commodity stocks, ACH, POT and BHP, were added and were stopped out with small losses.  Current stocks are listed in Table 1B.  TIP is an inflation-protected US Treasury ETF.  FXE is a currency ETF for the Euro.  FXA is a currency ETF for the Australian dollar.  Stop loss settings are explained in Section 2. 

Table 1B

Top-Down Portfolio

Top - Down Portfolio						As of Market close on		3/18/08
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
TIP	12/31/07	105.26	3/18/08	109.72	4.2%	Buy	100.37	Defensive
FXE	12/31/07	146.40	3/18/08	156.66	7.0%	Buy	141.98	Defensive
FXA	02/19/08	92.34	3/18/08	92.99	0.7%	Buy	85.95	Defensive
Trailing Stop Settings are Bearish							Tspi (long) = -10%
Net capital for 2008 =			-9.0%				f (long) = 25%

     The market has been in a down turn for the past month.  For the sectors charted in Figure 1A, only conglomerates and basic materials showed positive movement over the past four weeks.  For the past three weeks, the basic materials sector has actually been in a down trend and conglomerates have been essentially flat.  Sectors are listed in Table 1C. 

FIGURE 1A

Table 1C

Sector Rank

Sector	Last	1 wk	1 mo
Basic Materials	2.6%	0.0%	1.1%
Conglomerates	4.2%	5.8%	2.4%
Consumer Cyclical	3.7%	0.2%	-3.8%
Consumer Noncyclical	3.0%	-1.0%	-1.9%
Energy	2.6%	-4.6%	-4.5%
Financial	5.1%	0.6%	-1.6%
Healthcare	2.1%	-0.6%	-7.4%
Industrial Goods	4.6%	1.5%	-0.7%
Services	3.9%	0.3%	-4.2%
Technology	4.1%	0.3%	-2.0%
Transportation	5.2%	-1.7%	-6.6%
Utilities	2.2%	-0.5%	-3.1%

     The sideways to downward sector movement does not seem to be a firm basis for making a selection so we turn directly to industries.  Figure 1B shows industries that have been leaders for the past four consecutive weeks.  Music and video stores stand out with a 20% monthly gain. 

 Neflix, Inc. (NASDAQ: NFLX) is the only optionable stock priced over $20 for this industry that is in our database.  Netflix, Inc. provides online movie rental subscription services in the United States.  NFLX is being added to the portfolio with a -10% trailing stop.

FIGURE 1B

Currency Trades:

     Staying with what seems to be working in the declining market are defensive positions in currency ETF’s. 

Currency Shares Swiss Franc Trust (NYSE: FXF) is an ETF that reflects the price of the Swiss Franc.

Currency Shares Japanese Yen Trust (NYSE: FXY) is an ETF that reflects the price of the Japanese Yen.

     FXF and FXY are being added to the portfolio with a -10% trailing stop.

2.0 Portfolio Sell Stop Settings

The trailing stop percentage T_SP 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 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 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 T_SP for bullish, cautious and bearish market conditions.

FIGURE 2A

1. When the stock price remains within 40% of the buy price, the initial trailing stop percentage T_SPI varies according to 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 the maximum stock price is 40% or more greater than the buy price,

· T_SP is the wider of  T_SPI 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 P_BUY is the buy price and

o P_MAX is the maximum price reached.

 3. The sell stop price P_SELL is,

Current Status:  Bearish

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

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

     Note: The signs for T_SP and T_SP1 are negative for long positions and positive for short positions.

	Bullish		Cautious		Bearish
	S&P > SMA30 SMA30 slope >0		S&P < SMA30 SMA30 slope >0		SMA30 slope <0
	Long	Short	Long	Short	Long	Short
TSP1	-20%	10%	-15%	15%	-10%	20%
f	0.5	0.25	0.375	0.375	0.25	0.5

    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. 

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	92	47	Music & Video Stores	C's	5.9%	7.2%	21.7%
2	29	16	Real Estate Development	C's	6.6%	9.7%	12.3%
3	2	3	Manufactured Housing	C's	6.6%	9.2%	11.7%
4	12	8	REIT - Industrial	C's	5.3%	4.2%	10.4%
5	82	44	Diversified Computer Systems	C's	2.8%	0.9%	10.2%
6	31	19	Networking & Communication Devices	C's	5.3%	1.3%	9.0%
7	1	4	Home Furnishing Stores	C's	7.2%	7.2%	8.4%
8	6	7	Personal Computers	C's	4.8%	3.7%	7.6%
9	7	8	REIT - Healthcare Facilities	C's	4.0%	4.6%	7.6%
10	4	7	Long Distance Carriers	C's	3.3%	0.8%	7.1%
11	3	7	Semiconductor - Specialized	C's	5.0%	10.4%	6.5%
12	5	9	REIT - Office	C's	6.1%	0.3%	5.7%
13	110	62	Nonmetallic Mineral Mining	C's	3.5%	2.7%	5.0%
14	9	12	Trucks & Other Vehicles	C's	6.4%	4.5%	4.8%
15	30	23	Meat Products	C's	3.9%	-0.1%	4.7%
16	23	20	Pollution & Treatment Controls	C's	5.9%	6.0%	4.6%
17	24	21	REIT - Residential	C's	5.1%	5.0%	4.6%
18	102	60	Foreign Regional Banks	C's	0.3%	-4.8%	4.5%
19	67	43	Gold	C's	-4.7%	-1.4%	4.4%
20	10	15	REIT - Retail	C's	4.9%	1.0%	3.8%
21	93	57	Multimedia & Graphics Software	C's	2.7%	-0.2%	3.6%
22	60	41	Railroads	C's	5.4%	3.2%	3.6%
23	84	54	Silver	C's	-3.6%	-3.9%	3.5%
24	145	85	Aluminum	C's	3.8%	-0.8%	3.5%
25	15	20	Broadcasting - Radio	C's	7.6%	-1.1%	3.3%
26	20	23	Semiconductor - Broad Line	C's	3.9%	1.7%	3.2%
27	50	39	Personal Products	C's	2.2%	2.5%	3.1%
28	54	41	Security & Protection Services	C's	3.4%	4.0%	3.1%
29	36	33	Industrial Electrical Equipment	C's	4.5%	0.2%	3.0%
30	119	75	Steel & Iron	C's	4.8%	1.8%	2.9%
31	11	21	Application Software	C's	3.7%	0.7%	2.9%
32	17	25	Trucking	C's	4.4%	1.9%	2.8%
33	14	24	Lumber, Wood Production	C's	4.5%	2.3%	2.8%
34	85	60	Computer Peripherals	C's	4.2%	-0.6%	2.6%
35	140	88	Beverages - Brewers	C's	3.8%	1.5%	2.5%
36	37	37	Publishing - Periodicals	C's	2.5%	-0.3%	2.4%
37	25	31	Conglomerates	C's	4.4%	5.8%	2.4%
38	81	60	Semiconductor - Integrated Circuits	C's	4.8%	1.1%	2.1%
39	127	83	Synthetics	C's	4.3%	1.2%	2.1%
40	56	48	Beverages - Soft Drinks	C's	2.8%	-0.3%	1.9%

     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
7	1	4	Home Furnishing Stores	C's	7.2%	7.2%	8.4%
3	2	3	Manufactured Housing	C's	6.6%	9.2%	11.7%
11	3	7	Semiconductor - Specialized	C's	5.0%	10.4%	6.5%
10	4	7	Long Distance Carriers	C's	3.3%	0.8%	7.1%
12	5	9	REIT - Office	C's	6.1%	0.3%	5.7%
8	6	7	Personal Computers	C's	4.8%	3.7%	7.6%
9	7	8	REIT - Healthcare Facilities	C's	4.0%	4.6%	7.6%
41	8	25	Telecom Services - Domestic	C's	3.2%	1.3%	1.9%
14	9	12	Trucks & Other Vehicles	C's	6.4%	4.5%	4.8%
20	10	15	REIT - Retail	C's	4.9%	1.0%	3.8%
31	11	21	Application Software	C's	3.7%	0.7%	2.9%
4	12	8	REIT - Industrial	C's	5.3%	4.2%	10.4%
67	13	40	Catalog & Mail Order Houses	C's	6.4%	5.4%	-0.5%
33	14	24	Lumber, Wood Production	C's	4.5%	2.3%	2.8%
25	15	20	Broadcasting - Radio	C's	7.6%	-1.1%	3.3%
55	16	36	REIT - Diversified	C's	3.5%	1.2%	0.3%
32	17	25	Trucking	C's	4.4%	1.9%	2.8%
52	18	35	Auto Dealerships	C's	5.7%	3.4%	0.5%
87	19	53	Home Improvement Stores	C's	7.1%	2.5%	-1.8%
26	20	23	Semiconductor - Broad Line	C's	3.9%	1.7%	3.2%
46	22	34	Regional - Southwest Banks	C's	3.8%	1.6%	1.3%
83	21	52	Regional - Mid-Atlantic Banks	C's	3.3%	0.9%	-1.6%
16	23	20	Pollution & Treatment Controls	C's	5.9%	6.0%	4.6%
17	24	21	REIT - Residential	C's	5.1%	5.0%	4.6%
37	25	31	Conglomerates	C's	4.4%	5.8%	2.4%
64	26	45	Residential Construction	C's	9.2%	2.4%	-0.3%
51	27	39	Computer Based Systems	C's	4.5%	-0.1%	0.6%
121	28	75	Electronics Stores	C's	4.4%	0.7%	-3.4%
2	29	16	Real Estate Development	C's	6.6%	9.7%	12.3%
15	30	23	Meat Products	C's	3.9%	-0.1%	4.7%
6	31	19	Networking & Communication Devices	C's	5.3%	1.3%	9.0%
60	32	46	Specialty Eateries	C's	4.2%	2.0%	0.0%
74	33	54	Regional - Northeast Banks	C's	5.2%	2.1%	-1.1%
104	34	69	Regional - Pacific Banks	C's	3.7%	1.5%	-2.6%
88	35	62	Recreational Vehicles	C's	5.4%	1.0%	-1.8%
29	36	33	Industrial Electrical Equipment	C's	4.5%	0.2%	3.0%
36	37	37	Publishing - Periodicals	C's	2.5%	-0.3%	2.4%
106	38	72	Insurance Brokers	C's	4.6%	-0.8%	-2.7%
62	39	51	Auto Parts Wholesale	C's	2.6%	1.0%	-0.1%
102	40	71	Foreign Money Center Banks	C's	5.9%	-1.2%	-2.6%

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
207	176	192	Recreational Goods, Other	C's	7.1%	1.1%	-14.2%
68	175	122	Agricultural Chemicals	C's	4.5%	2.2%	-0.6%
205	177	191	Semiconductor- Memory Chips	C's	3.1%	-4.0%	-12.2%
210	178	194	Home Health Care	C's	3.0%	-0.8%	-15.1%
166	179	173	Long-Term Care Facilities	C's	1.3%	-5.8%	-6.4%
200	180	190	Office Supplies	C's	4.1%	-2.3%	-11.5%
177	181	179	Paper & Paper Products	C's	2.0%	-1.7%	-7.6%
190	182	186	Consumer Services	C's	2.0%	-2.8%	-9.0%
80	183	132	Oil & Gas Equipment & Services	C's	4.1%	-1.2%	-1.3%
126	184	155	Drug Manufacturers - Other	C's	2.4%	0.2%	-3.7%
132	185	159	Appliances	C's	3.9%	1.1%	-4.1%
178	186	182	Advertising Agencies	C's	5.0%	-2.2%	-7.6%
168	187	178	Broadcasting - TV	C's	4.3%	-0.5%	-6.6%
172	188	180	Communication Equipment	C's	4.5%	0.6%	-6.9%
150	189	170	Small Tools & Accessories	C's	3.4%	-3.2%	-5.2%
195	190	193	Drugs Wholesale	C's	2.7%	-4.5%	-10.5%
111	191	151	Major Integrated Oil & Gas	C's	2.9%	-1.7%	-3.0%
176	192	184	Information Technology Services	C's	4.0%	-2.2%	-7.5%
184	193	189	Medical Laboratories & Research	C's	3.0%	-3.6%	-8.2%
82	194	138	Copper	C's	3.7%	-4.2%	-1.5%
169	195	182	Entertainment - Diversified	C's	3.4%	-0.2%	-6.6%
154	196	175	Oil & Gas Pipelines	C's	2.1%	-3.7%	-5.5%
122	197	160	Heavy Construction	C's	6.4%	-3.8%	-3.4%
173	198	186	Photographic Equipment & Supplies	C's	4.4%	0.0%	-7.0%
183	199	191	Aerospace/Defense - Major Diversified	C's	1.4%	3.6%	-8.0%
120	200	160	General Contractors	C's	7.0%	-1.6%	-3.4%
156	201	179	Lodging	C's	2.7%	-2.7%	-5.7%
165	202	184	Farm Products	C's	4.1%	-1.3%	-6.3%
133	203	168	Oil & Gas Refining & Marketing	C's	4.1%	-4.6%	-4.1%
123	204	164	Internet Service Providers	C's	8.5%	3.9%	-3.4%
170	205	188	Foreign Utilities	C's	1.8%	-2.0%	-6.7%
175	206	191	Basic Materials Wholesale	C's	5.4%	-0.3%	-7.4%
131	207	169	Oil & Gas Drilling & Exploration	C's	3.3%	-4.0%	-4.0%
199	208	204	Shipping	C's	6.2%	-2.6%	-11.5%
180	209	195	Technical Services	C's	4.7%	-3.4%	-7.7%
193	210	202	Auto Manufacturers - Major	C's	2.8%	-4.1%	-9.8%
202	212	207	CATV Systems	C's	3.0%	-0.6%	-11.6%
179	211	195	Rubber & Plastics	C's	5.2%	-2.5%	-7.7%
149	213	181	Industrial Metals & Minerals	C's	3.7%	-0.4%	-5.2%
143	214	179	Wholesale, Other	C's	2.3%	-2.9%	-4.8%
191	215	203	Independent Oil & Gas	C's	-0.1%	-12.4%	-9.2%

FIGURE 5A

6.0 Lagging Industries

     Lagging industries for the past month are listed in Table 6A.  A chart showing the rank performance of the 20 worst ranked is shown in Figure 6A.

 Table 6A

Lagging Industries

Rank [R]	Rank of Change   [C]	(R+C)/2	Industries	Companies	Last Gain	1 wk Gain	1 mo Gain
176	192	184	Information Technology Services	C's	4.0%	-2.2%	-7.5%
177	181	179	Paper & Paper Products	C's	2.0%	-1.7%	-7.6%
178	186	182	Advertising Agencies	C's	5.0%	-2.2%	-7.6%
179	212	196	Rubber & Plastics	C's	5.2%	-2.5%	-7.7%
180	209	195	Technical Services	C's	4.7%	-3.4%	-7.7%
181	153	167	Regional Airlines	C's	5.2%	-1.5%	-7.9%
182	95	139	Drugs - Generic	C's	2.2%	0.9%	-7.9%
183	199	191	Aerospace/Defense - Major Diversified	C's	1.4%	3.6%	-8.0%
184	193	189	Medical Laboratories & Research	C's	3.0%	-3.6%	-8.2%
185	79	132	Surety & Title Insurance	C's	8.6%	-0.6%	-8.4%
186	111	149	Healthcare Information Services	C's	2.4%	-4.1%	-8.5%
187	144	166	Research Services	C's	2.8%	-0.4%	-8.7%
188	163	176