Mousetrap 06/30/2012 (simplified)

Small Portfolio XLF & IAU 7.87%

Position Date Return Days
GCI 7/14/2011 13.48% 352
CSGS 10/3/2011 36.71% 271
NLY 10/25/2011 9.53% 249
KBR 10/27/2011 -14.79% 247
VG 10/27/2011 -38.91% 247
BT 1/4/2012 6.38% 178
SAI 5/30/2012 9.39% 31
XEC 6/5/2012 9.80% 25
DECK 6/15/2012 -8.29% 15
FCX 6/25/2012 6.40% 5

S&P Annualized 1.16%
Small Portfolio Annualized 7.26%
Large Portfolio Annualized 8.19%

[url]http://market-mousetrap.blogspot.com/2012/06/06302012-short-and-simple.html[/url]
After talking to some friends who were trying (unsuccessfully) to follow the model, I’m simplifying the blog.
They all basically asked for long-only, un-timed, and un-margined stock ideas.
So I’ll be sharing my long-only, un-timed, and un-margined stock ideas.
When I started sharing this, I wasn’t reporting my short and hedging ideas for the first few months, and it seems that was probably the best way to go. Right now all my margined plays have totaled a 13.76% annualized return – but it’s been a choppy sideways market for the past year, and long term a long only position WILL eventually grind out an advantage.
I do consult two sources for market timing – my friend Len and the site [url]www.effectivevolume.com[/url] – and I’ll leave timing in their capable (and superior) hands. My goal is to create a model that can be used by slow pokes who don’t short the market and don’t use margin.
For you slow pokes out there – the next scheduled stock rotation is this coming Friday, July 6, 2012.
The small portfolio will still be open to end of day trades, about 3:30-4:00. Those should average about a trade a month (and cost me a grand total of five minutes of my day). The large portfolio should average a trade every one to two weeks.
My one day trading experiment this week was exciting, but unworkable. I was on vacation this week and don’t plan to STAY on vacation. I have a job that I enjoy. I don’t have time to day trade. And this blog is for folks like me.
As far as the world markets are concerned, the fact that I’m dropping hedging from the model doesn’t mean I’m not hedging myself. I don’t believe this hogwash in Europe, and I don’t have any grand hopes for a political miracle in this country either. And for you folks who fondly remember Ronald Reagan… even if this were 1980, we would still have two years of bear market left to go.
Before this is over I expect the S&P, my small portfolio, AND my large portfolio, to fall underwater at least one more time.
Tim

With the rally still in place, the long sector shifted from XLF (financials) to XLV (healthcare).

As I noted the other day, the industry jacked up their rates when the law was passed just in case the mandate didn't hold. Since the mandate held, they will (for the time being) essentially be DOUBLE collecting.

The healthcare sector has therefore attracted significant volume and breadth, and I exchanged my XLF position to XLV.

Small Portfolio XLV & IAU 10.16%

Position Date Return Days
GCI 7/14/2011 14.18% 356
CSGS 10/3/2011 40.74% 275
NLY 10/25/2011 10.77% 253
KBR 10/27/2011 -12.34% 251
VG 10/27/2011 -39.51% 251
BT 1/4/2012 8.08% 182
SAI 5/30/2012 9.75% 35
XEC 6/5/2012 11.51% 29
DECK 6/15/2012 -7.94% 19
FCX 6/25/2012 9.96% 9

S&P Annualized 1.96%
Small Portfolio Annualized 9.28%
Large Portfolio Annualized 9.52%

Rotation: selling FCX; buying CVX
Because of a scheduling conflict, I won’t be able to do any stock analysis on Thursday evening.
I’ll have to make the stock rotation scheduled for Friday a day early – tomorrow.
FCX has turned into the fastest turnaround the model has experienced, and will be exchanged for CVX, Chevron.
Two things of note…
The market is short term overbought. Most of the volume activity has been in cautious sectors like healthcare, and I even sold XLF and bought XLV on the small portfolio accordingly. But in my opinion both financials and healthcare are due a slight pullback (even if it’s no more than a pause that refreshes). I don’t trade opinions on the model, of course – so I went ahead and traded the two ETFs instead.
If we do have a pullback in defensive sectors it will be important to watch the offensive sectors like technology, consumer cyclicals, manufacturing, and materials. If those do well, my Chevron trade should have a good ride.
If not, then it will just pull back too.
No way to know. I can position myself for a good wave, but I can’t make one appear.
Tim