PORTFOLIO UPDATE: SEARCHING FOR SUGAR MAN
If you haven't seen the documentary, "Searching For Sugar Man" it is well worth your time. Much like this bull market, it is the story of a highly-talented artist that went largely undiscovered for decades except among the people of South Africa who thought of him among the greatest singers of all time. While I am unsure of whether the people of South Africa are driving this rally, I am sure that this market is highly-talented. I am also sure that the potential of this market is largely undiscovered by investors.
A statistic blew through my Twitter feed earlier today that went something like this: The Dow has not experienced 3 down days in a row for the past 100 days, which is an all-time record. I painstakingly went through the daily chart of the Dow to see where the 100 day mark started. December 31st is the date this 100 day period began. There is some important information coming so pay close attention to what I am about to say. First, let me remind you that I have been talking about the generational trajectory points on the Dow for years now. Ever since I started this website, a break of the generational trajectory points was what I said would lead to great things. There are countless examples on the website. Here is one from August 2, 2012, where I said the following: "The power of these generational trajectory points is clearly demonstrated here. As is the importance of a break above 13,500. A break that will usher in a brand new bull market lasting for years to come." The full article from August 2012 is here http://www.zenpenny.com/the-power-of-trajectory-points-starring-the-dow/
Now back to the 100 day thing. December 31st, 2012 is the date this 100 day period began, to repeat myself. On January 2nd, 2013 the Dow took out the first important generational trajectory. This was the one that originated at the 1932 lows. On January 17th, the Dow took out the generational trajectory that originated at the 1937 highs. What does all this have to do with the 100 day record we are in the midst of?
The 100 days without more than two down days is a confirmation that the market recognizes the scope of what has occurred here in 2013. This is the beginning of an extended period of strength of US equities. By extended, I don't mean weeks or months. I mean years. I mean that this is 1982 or 1995 or 2002. The market is talking through its actions thus far in 2013.
Nobody seems to care though. All that seems to occupy the minds of investors is when this bull market will end.
Now let's talk about the sh0rt-term. I am in the midst of a substantial up month in the portfolios. On top of that, we just witnessed a substantial expansion in daily volatility and volume across multiple key averages right at a very important cycle turn date that I had for this week. Given the fact that I would like to protect some gains here along with the aforementioned technical circumstances, I was obliged to take on a little bit of protection.
During the trading day, I tweeted the following:
This is a mid-sized position, taking up roughly 12% of the portfolios. I will take it up to a 25% position upon further weakening in the markets. A summer drought of sorts is pretty standard for bull markets. Over the nearly 20 years I have been doing this, I have always loved May and June trading. July and August, however, have been some of my worst months. Summer trading generally stinks. And I can imagine that after such a run during the first half of the year, we may get an early start to an unpredictable and potentially treacherous summer trading season.
With that said, the current positions consist of WMIH, IWSY, MITL, CIDM, HMPR, SBCF, JMBA and TZA. The current mix is approximately 85% long, 12% short (TZA) and 3% cash.
