By 2011, I was furious with the investment-management business... The S&P 500 Index and Nasdaq Composite Index ripped higher in the late 1990s. Many folks got comfortable with anything and everything going up.
Here's How I Roughly Doubled the Market's Performance Last Quarter
By Pete Carmasino, chief market strategist, Chaikin Analytics
By 2011, I was furious with the investment-management business...
The S&P 500 Index and Nasdaq Composite Index ripped higher in the late 1990s. Many folks got comfortable with anything and everything going up.
But then, the bottom fell out. And from 2000 to 2010, stocks struggled to move higher.
This period is now known as the "lost decade." That's because of the abysmal returns...
The S&P 500 fell at least 10% every year from 2000 to 2002. It took the market seven years to make a new high. And it was much longer before the index truly broke out.
Then, during the financial crisis in 2008, the S&P 500 plunged nearly 40% in a year.
It didn't matter which manager you chose. They all kept failing to produce for their clients. And yet, they all collected their fees while delivering almost nothing in return.
That didn't sit well with me. So I started to search for a better way to help people...
You see, at the time, almost all fund managers relied on fundamentals alone. But that approach wasn't working...
After all, does it matter that you've invested in a "good business" if its stock isn't going up? How long do you hold on and tolerate the poor returns?
These fund managers' fundamentals-only approach seemed crazy. To me, the investing puzzle for these folks was obviously missing a piece...
Fifty-year Wall Street legend (and veteran of nine bear markets) Marc Chaikin says that whether you end the year in the green or in the red, all hinges on October 3. And if you want to shield your wealth from the volatility ahead – and potentially even double your portfolio – there's one straightforward move you must make immediately.
It's already creating millionaires and billionaires at the fastest pace in history. CNBC calls it "the largest wealth creation spree in history." Yet 1 in 3 Americans now fear their financial situation is deteriorating. There's only one way to survive, says the man who predicted the 2008 and 2020 market crashes, but sadly it's already too late for many. Everything you need to know is here.
The Power of Sector Rotation
I'm talking about reading charts and figuring out the "technicals" of a stock's price.
In the mid-1990s, I learned how to do that from books and people I worked with. This approach seemed to work more than it didn't – especially during the dot-com boom.
As the years passed, I expanded my skillset with rules like "support" and "resistance" levels. I also learned how to incorporate things like volatility triggers into my approach.
I dove into a new world of quantitative investment management. And as I got more comfortable, I learned to tweak my investments when the market's technicals changed.
That tinkering ultimately led me to the style of sector rotation.
Sector rotation builds off the idea that the market isn't just one big unit. Sometimes, parts of the market zig while others zag. And they're constantly changing – or rotating.
Sector rotation seems like common sense. And yet, it's still a relatively new concept in the investment-management business.
Even I didn't fully embrace the idea at first...
At the start of the lost decade in stocks, I always wanted to know "why" a particular move would happen. It's human nature to try to figure out the underlying reasons.
But as tech stocks made big moves in the dot-com era, I realized the "why" isn't always known. Rather, something else seems to matter a heck of a lot more for investors...
Price action.
The price tells an important story about a market or individual stock. And if you wait until the story ends, it's often too late for you to capitalize on an opportunity.
Eventually, I realized that sector rotation relates to business cycles. That helped me to see moves in sectors before anyone else was mentioning them in their daily research.
The business cycle spins through four stages – early recovery, full expansion, slowdown, and recession. And along the way, the market's different sectors ebb and flow.
Today, we can see all this in practice...
Stocks have continued to rally over the past three months. The S&P 500 and tech-heavy Nasdaq 100 Index both hit several new all-time highs in that span.
Since the market's early April bottom, the S&P 500 is now up around 34%. And the Nasdaq 100 has gained roughly 44%.
The S&P 500 has risen by about 8% in the third quarter alone. The Nasdaq 100 has climbed about 9%.
Put simply, the trend is still up. So a lot of investors did well this quarter.
But for folks that followed the third-quarter recommendations in my Chaikin Power Portfolio publication... they crushed that performance.
In short, Chaikin Power Portfolio leverages sector rotation to find the best areas of the market to target during a particular quarter.
The third-quarter iteration of the Chaikin Power Portfolio gained an average of around 16%. That means we've roughly doubled the broad market's return during our holding period.
It doesn't get much better than that, folks. And it speaks to the power of our strategy...
Looking ahead, a new quarter is here. I've just put together the next iteration of the Chaikin Power Portfolio for it. And tomorrow, I'm releasing the full details behind this quarter's portfolio composition.
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are somewhat Bullish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Utilities
+1.83%
Health Care
+1.63%
Industrials
+0.78%
Consumer Discretionary
+0.72%
Information Technology
+0.59%
Real Estate
+0.31%
Financial
+0.2%
Energy
+0.18%
Consumer Staples
+0.03%
Communication
-0.03%
Materials
-0.51%
* * * *
Industry Focus
Transportation Services
4
30
10
Over the past 6 months, the Transportation subsector (XTN) has underperformed the S&P 500 by -5.56%. Its Power Bar ratio, which measures future potential, is Weak, with more Bearish than Bullish stocks. It is currently ranked #19 of 21 subsectors and has moved down 1 slot over the past week.
Indicative Stocks
FIP
FTAI Infrastructure
XPO
XPO, Inc.
KEX
Kirby Corporation
* * * *
Top Movers
Gainers
PFE
+6.83%
MRK
+6.81%
DHR
+6.56%
TECH
+6.51%
CRL
+6.44%
Losers
ALB
-6.68%
MGM
-5.12%
COF
-4.93%
PAYC
-4.6%
XYZ
-4.14%
* * * *
Earnings Report
Earnings Surprises
NKE NIKE, Inc.
Q1
$0.49
Beat by $0.22
PAYX Paychex, Inc.
Q1
$1.22
Beat by $0.02
LW Lamb Weston Holdings, Inc.
Q1
$0.74
Beat by $0.21
* * * *
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