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Sunday, March 22, 2015

System 12 Plus. 3-2015

.this update covers activity from 3/23/2015 to 6/26/2015.

There are no changes to MD. XOM slipped 2 spots to #4. BABA keeps coming down, like I was expecting ever since ipo.
Overall Mega Dozen is in a difficult condition, with half stocks either outright disqualified or unavailable. I'm not surprised, as I noticed weakness in large-cap stocks awhile ago (and wrote about it back in February here (link)). This rally off March 11 low was led by small-cap stocks, with S&P500 lagging notably, and NYA still under February 25 high. Comparing 'internal conflict' metrics today with what I observed a month ago (at almost same SPX level) - I see a slight improvement in number of stocks near 52 week highs. This looks like a broad based rally, not led by mega stocks. Good or bad... I don't know.

I remain very pleased with System12 performance. Risk control filters (designed for keeping me from buying Mega Dozen (MD) stocks during correction or in downturn) did just that - kept me away from bad risk. MD stocks are the biggest and the best, but its not written anywhere that they must remain to be so. Some will fall and never come back. I don't know which ones and when. I don't know the future. Really. I just know that System12 hasn't been fully loaded for months. I'm not arguing. I'm glad.


BOT: (LB)PFE on 5/28; (LB)FB on 6/2
SLD: BRK on 6/5.
DIVI received:WFC

This is MD:

MD Control: no changes
Disqualified: PTR, XOM, MSFT, with GE, JNJ - borderline

 This is SD:
HSBC out, DIS in

KREM update.
Last time I looked at KREM concept back in September last year post (link). Back then I wasn't sure how to use it, but mostly because I had time to look inside the market and KREM didn't give me anything I didn't already had or used, so I left it be. Now, with severe time constricting personal limitations, this thing will become handy. Especially in System 9.

KREM has only couple of changes under last selection criteria. In an interest of index manipulation, I substituted XOP and XES/OIH with single position of  XLE. There is no way out of energy losses for this index.  SOCL is added back. I decided to remove URA for now - this thing is really tiny and industry deemed completely irrelevant (my personal fetish aside). SEA will take its place, although it was a tie with SLX. Other notable etf's coming up in scans: XLV, SMH, and old GDXJ/SIL with craziness completely off the charts.


KREM is not an index to blindly invest into. It is not intended as model either. Methinks, its an index of 'active' market, as such it has top winners, and bottom losers, and volatile movers, and few of other extremes. One thing is for sure - its components MOVE! I am trying to get my mind around this index, understand its nature, but some vital point evades me still.

Chart presented is an equal allocation portfolio (no commissions, no dividends, fractional share count) of original KREM composition (red), current KREM2 (blue) and S&P500. Under-performance is notable, but (again) this index is not meant to be an allocation model. Rather, its a picture of average, active, media driven, collectivist investor horde.