Friday the 13th ended up being just a little scary, eating into an otherwise friendly week:
Top 20 tracked the S&P 500 almost to the penny, increasing by 0.9%. Within the model, there were some rather extreme moves. To the downside, our Energy company was slammed along with its peers as the price of natural gas plunged to two-year lows. On the other hand, we had four companies rally by more than 5%, including one of the names to which we added during the week. We have two names reporting this week. I have a couple of potential additions that I am contemplating, but I will most likely wait until after the earnings reports on Thursday.
Conservative Growth/Balanced gave up a little ground, rallying 0.52%,which was 0.25% behind the benchmark of 60% stocks and 40% bonds. The slight underperformance was a function of the stocks lagging slightly. Considering how typically conservative stocks are faring poorly so far in 2012 (a reversal of 2011's good fortunes), the model is performing reasonably well.
Sector Selector ETF had a stellar week, rallying 2.63% and exceeding the S&P 500 by 1.7% to bring its YTD lead to almost 2%. The story here is the big allocation to Financials, Emerging Markets and Small-Caps, all of which performed quite well during the week.
Market Outlook
The action remains encouraging overall. Perhaps the best part about the week was today. Though the market fell slightly, it reacted well to what might have been damaging news regarding the S&P downgrades of the European countries. We didn't quite blow away the highs from October, but we certainly have fully recovered. I am somewhat cautious about trying to read too much into the rally at this point, as a lot of it can be attributed to an increased tolerance for risk-taking subsequent to year-end. Many of the worst performing investments from last year are drawing tremendous interest already this year. Encouragingly, we are starting to see less correlation across the markets. This week, we will begin to see a significant number of earnings reports from key companies across various sectors.
Articles
- Autos Instead of Homes? - TradeKing
- Is the Rally in Financials Sustainable? - Seeking Alpha
- Technology Sleepers - Seeking Alpha
Regards,
Alan Brochstein, CFA
www.InvestByModel.com
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