Condition Bear Market
S&P Target 970

Position Date Return Days Call
BKI 5/31/2011 -4.96% 81 Hold
CFI 6/22/2011 -3.64% 59 Hold
SE 6/27/2011 -9.11% 54 Hold
AWR 7/5/2011 -3.64% 45 Closed
CLH 7/6/2011 -12.25% 45 Hold
GCI 7/14/2011 -26.16% 37 Hold
AGO 8/5/2011 -7.27% 15 Hold
DISH 8/10/2011 -1.20% 10 Buy
NA NA NA NA NA
NA NA NA NA NA
Mousetrap Return -8.53%
S&P Return -12.20%

Mousetrap Annualized -72.03%
S&P Annualized -102.99%

Annualized Advantage 30.97%


After the worst 4 week drop since the last bear market ended, the market is due for a bounce. Most of the reasons are simply anecdotal: every indicator on the planet is oversold, etc. On my sector configuration model, however, I’m showing a divergence of money flow into the bullish sectors. Technology (XLK) and Basic Industry (XLB) are both in positive accumulation now. The greatest negative divergence is now Energy XLE, again, replacing XLF.

On sector timing, then, the long position would be XLK, and a short position would be XLE.

I’m using an occasional XLE short position as a hedge against the long positions on my Mousetrap model, since the model itself is untimed. I closed that short position when we first hit the 1120 range (where we are now).

Finally, the other reason for a bounce is that the annualized performance of the S&P is once again greater than 100%. Since the market cannot lose MORE than 100% in a year, it really should bounce or pause here.

Currently I am outperforming the S&P by over 30%, but that’s obviously not as good as cash.