Thursday, May 23, 2013

T2 versus T11 on SA Model...5.23.13

OK...that was what is known as a key reversal day yesterday.  What today will bring is anybody's guess but we're starting out with a lot of red on the tape and some of the majors are taking heavy hits.
Good news for gold and bonds...for now.

In response to a subscriber question here's a look at the SA portfolio mentioned yesterday and updated as of Wednesday's close using a top2 versus a top 11 (all in) sort.
Remember...these are stocks forecast to outperform the SPY during 2013 so there's no delta or beta neutral buffer....these are supposed to be the best of the no hedging our bets in this portfolio and risk management for this type of model is definitely a must.

Yesterday's action was actually a timely opportunity to test the validity of a 100% bullish concept (SA)  as we can see that the top 2 sort suffered a big hit while the all in model's loss was moderate.  (CSCO alone lost 2.5% yesterday). Now, this isn't an endorsement for the Seeking Alpha portoflio...I have no financial relationship with them...we're just looking at the argument for supporting a diversified bullish portoflio..even when things start to fall apart. A followup lookback tomorrow should be instructive.

Note that the equity line in both the top 2 and top 11 sorts has crossed through the P6  and now approaches the RSQ stop line. The top 2 sort looks grimmer than the top 11 model, but this could change quickly and strict observance of stop settings is (as always) strongly recommended.

Click once on each chart to enlarge and clarify.