June was the first month to see the S&P 500 produce a loss after dividends since October. "Sell in May and go away" got off to a nice start. After peaking at 1687, bouncing at 1598 to 1654 and then plunging to 1560 (Monday), we bounced as high as 1620. The correction was 7.5% at its worst and got into my range of "1530-1570". I don't think it's over yet, but there is always that chance. One curious aspect is how little the R2000 is down. While SPY at 160.20 is down over 5% from the peak, IWM at 97 is down just over 3%. In fact, at its low, IWM was down 6.5%. It tends to move about 120% of SPY, so this relatively better performance in a down market is interesting.
Soaring interest-rates have been the major problem. Longer-term, I think that the move from ultra-low to just low is likely of little impact to valuations or to economic growth, but this is what big money keys on for now and needs to be respected as the major catalyst. The other dynamic of a very weak China actually counters this factor, as it could lead to renewed concerns about our economic growth and lead rates to drop again. After maxing out cash for quite some time, I spent some in the Conservative Growth/Balanced model this week because bonds are so oversold. Are they a great value now? No, but they have less near-term price risk and now have at least a shot of outperforming cash.
I don't spend a lot of time here discussing REITs, but many of them have sold off more than they should. They bounced, but there could be some great entries into high quality REITs later this summer. My client bought some FRT - this is like the Rolls Royce of the sector. We were buying it on Monday, so it has bounced too much now (95-103). I actually am surprised at how much it moved. BMR and SKT are some other names I like. COR and STAG too.
48 out of 100 names on the watchlist ( Download Watchlist062813 ) closed above the 10dma. There were no 10% movers this week. Black 1s are now down to just 7, with ANV and VOLC as the only black 5s. Oversold names on the watchlist include ANV and SWI at more than 2 units and NEM, CLH, TITN, CPRT, EZPW, VOLC, BEN, INGR and MSM between 1 and 2 units. On my "prospects" list, AGN has been blown out of the water on the potential generic of its dry-eye drug, Restasis. It's at -4 units - might be worth a stab. AAPL is at -1.85. CTRX is at -1.53. Stocks offering more than 35% to my one-year target picked up XEC and lost SCVL. So,as denoted by non-bold green on the spreadsheet, these include ANV, BCEI, VOLC, CE and XEC.
Looking at the positions ( Download Positionwatch062813 ), today I will share "confidence" on each of the 29 names that will be remaining after we sell WSM (which I do like) and CFR (which I also like). Ranking on 1 is high, 5 is low:
- AVX 2
- BEN 1
- CAH 2
- CATO 3
- CHS 2
- CLH 4
- CSCO 2
- CSTR 2
- CVX 2
- EZPW 5
- HAYN 4
- IIVI 3
- INGR 2
- INTC 2
- LMNX 2
- MAKO 3
- MASI 2
- MW 2
- NEM 5
- OMI 2
- PBI 1
- PLPC 4
- ROSE 2
- SMCI 4
- STJ 2
- SWI 3
- TECD 3
- TITN 5
- VWO 3
I continue to have to many "problems". One can't invest in just the very best companies and expect to beat the market all of the time - it's good to take some risk. Unfortunately, too many of these dented stories are turning out to have been flood-damaged too. I need to check Car-Fax, so to speak. I don't really take those chances in CG/B - that's one of the reasons why its performance is so freaking good.
Comments