Subscriber Newsletter Features and Portfolio Performance Through November 2008

Largely as a result of reader input, I continue to make enhancements to the subscriber newsletter. At the beginning of January, I will be rolling out more new features. The one I am most excited about is a weekly section on volatility that will appear in the Sunday edition of the newsletter. This section will track and analyze changes in the VIX, the VIX and More Global Volatility Index, the VXV, and a number of related indicators, such as moving averages in the VIX, historical volatility in the SPX, the VIX:VXV ratio, etc.

As currently constructed, the Sunday edition of the newsletter continues to incorporate a number of regular weekly sections, including a market commentary, asset class outlook, market sentiment update, current investment thesis, and week in review.

Wednesday’s edition is more feature-laden and has traditionally been devoted to subjects such as ETFs, sector rotation, volatility, market breadth, and related market sentiment-related issues.

Some of the November features from the Wednesday edition included:

• McClellan Oscillator Shows Strong Breadth Supporting the Bounce
• Put to Call Ratios Suggest Bullish Reversal Soon
• ETF Bottom Fishing Food for Thought
• Top Performing Sector ETFs
• Bullish Explosion in Spread Between VIX and 20 Day Historical Volatility in SPX
• What’s Working? Put to Call Ratios and the VIX-SPX HV Spread
• Credit Default Swaps and Sovereign Debt Problems
• Double Tops in the VIX (excerpted on the blog as The Significance of Double Tops in the VIX)
• VIX Term Structure: No End to a 45+ VIX?
• Oil: An Alternative Scenario
• Oil and Energy Stocks
• Analysis of Weekday Performance in the Most Recent Bearish Leg
• Outlook: More Opportunities Ahead for the Shorts
• Short Timing Triggers Using RSI
• Shorting with Direxion -300% ETFs
• Extreme Implied Volatility and Bear Put Spread Opportunities
• Implied Volatility and Corporate Themes
• Cisco’s Guidance Is a Shot across the Bow for the Technology Sector

Since their launch (3/30/08 for the Focus Foreign Growth and Stock of the Week, 8/31/08 for the Focus Growth 2), the portfolios (equities only, long only) have performed as follows:

If anyone has any additional questions about the subscriber newsletter, or is interested in reviewing a sample, please feel free to email me at bill.luby@gmail.com

Subscriber Newsletter Features and Portfolio Performance Through October 2008

Thanks to reader input, the subscriber newsletter has undergone several enhancements during the past month.

The Sunday edition of the newsletter continues to incorporate a number of regular weekly sections, including a market commentary, asset class outlook, market sentiment update, current investment thesis, and week in review.

Wednesday’s edition has traditionally been devoted to subjects such as sector rotation, volatility, market breadth, and related market sentiment issues. Recently, I have expanded the focus to include a more global emphasis, incorporated more macroeconomic and fundamental issues, discussed specific VIX options trading opportunities, and highlighted selected stocks and ETFs.

Some of the October features included:

• Sectors Most and Least Likely to Lead a Rally
• Hedge Fund Selling and Capitulation
• Bottoms and Price Discovery
• A Simplified Approach for Bottoms and When to Buy
• Combining the VIX and the TED Spread
• Should You Go Long at Volatility Extremes? A Look at the Nikkei (excerpted on the blog as Should You Go Long at Volatility Extremes? A Look at the Nikkei 225)
• VIX:VXV Ratio Waiting for Confirmation
• How to Trade the VIX
• VIX Bear Call Spreads
• VIX Bull Put Spreads
• Capturing Volatility in VIX Options: A Trade Idea
• Beaten Up Large Caps on the Move
• Some Oversold Stock Ideas Using the DeMarker Indicator
• What the Big Boys Were Buying When the Market Rallied
• The Lack of 52 Week Highs in the S&P 500 Index
• Evaluating Prospects for a Housing Market Turnaround – Inventory
• Evaluating Prospects for a Housing Market Turnaround - Affordability
• Biotech and Health Care Stocks with Offensive and Defensive Potential
• Recent Sector Weakness
• Overbought and Oversold ETFs

Since their launch (3/30/08 for the Focus Foreign Growth and Stock of the Week, 8/31/08 for the Focus Growth 2), the portfolios (equities only, long only) have performed as follows:

If anyone has any additional questions about the subscriber newsletter, or is interested in reviewing a sample, please feel free to email me at bill.luby@gmail.com

Subscriber Newsletter Features and Portfolio Performance through September 2008

One of purposes of the subscriber newsletter blog is to provide a space in which to summarize the recent content in the newsletter and update the performance of the model portfolios that I make available to newsletter subscribers.

The newsletter continues to incorporate a number of regular weekly sections, including a market commentary, asset class outlook, market sentiment update, current investment thesis, and week in review. Features generally focus on subjects such as sector rotation, volatility, put to call ratios, market breadth, volume, and other sentiment-related issues. Some of the September features included:

• An Overview of Capitulation
• Using the Force Index to Measure Elements of Capitulation
• Evaluating the Health of the Credit Markets
• What Happens When the VIX Spikes Over 40
• More on SPX Performance After VIX Spikes
• VIX:VXV Ratio and VIX Futures
  
• VXV Volatility as a Market Timing Signal
• Putting Highs and Lows in Historical Perspective…and Looking Forward
• Gold Miners Extremely Cheap Relative to the Commodity
• SPX Has Now Pulled Back Over 50% From 2002-2007 Bull Move
• A Conceptual Framework for Volatility Events
• Event Volatility vs. Structural Volatility
• The Rise of the Russian Bear
• Extreme Stress in Asia, Particularly in South Korea

Since their launch (3/30/08 for the Focus Foreign Growth and Stock of the Week, 8/31/08 for the Focus Growth 2), the portfolios (equities only, long only) have performed as follows:

If anyone has any additional questions about the subscriber newsletter, or is interested in reviewing a sample, please feel free to email me at bill.luby@gmail.com

Stock of the Week Cumulative Gain Now 102% Since Inception

To update the post below, Stock of the Week Performance from 03/30/08 to 09/08/08, I thought it might be of interest to note that the cumulative gains in the Stock of the Week selection are now up to 102.1% since the March 30, 2008 inception.

Credit goes to a strong week from Aceto (ACET) for pushing the SOTW over the triple digit threshold.

Stock of the Week Performance from 03/30/08 to 09/08/08

Lately I have received several questions about the Stock of the Week. Each Sunday I conclude the subscriber newsletter with a new Stock of the Week (SOTW) selection. These are companies that range from large caps to small caps (minimum market capitalization of $250 million and average daily volume of 250,000 shares) that I believe have excellent short-term potential and solid long-term potential.

As I state in the newsletter, each week I automatically ‘sell’ the selection from the previous week and replace it with a new selection, regardless of my opinion about the desirability of holding the Stock of the Week beyond the weekly time frame. The result is that I am highlighting a new opportunity each week rather than trying to optimize the holding period for specific stocks.

This approach has led to some interesting results, which I have summarized in the chart below. First, of the 24 SOTW selections, 17 have been profitable at the end of the first day after they were recommended, with an eye-catching mean return of 3.4% in that first day. Excluding the current selection, which was up 7.7% yesterday, 15 of the 23 SOTW selections have been profitable at the end of the week, with a mean return of 2.3%. Not surprisingly, the variation in the weekly returns is fairly high, ranging from +15.5% to -14.8%, with a median weekly return of 3.7%. As of yesterday’s close, the sequential return of all SOTW selections from the March 30, 2008 inception was 84.4%.

It is important to note that the SOTW selections have not necessarily been strong performers following the initial one week holding period. The graphic shows one stock that is down 64% since the SOTW designation and two other stocks that have fallen in excess of 40%. Obviously any approach that beats the indices by such a wide margin must entail a great deal of risk – and the SOTW is no exception. The SOTW performance history does suggest, however, that it is possible to rack up big winners in a bear market, even while picking stocks that are generally falling in concert with the market.

Finally, I feel obliged to add that I certainly do not expect the SOTW selections to continue to match the performance from the first five or so months, but I am cheered by the numbers that have been put up so far and the by the interest this feature has generated.

Subscriber Newsletter Features and Portfolio Performance through August 2008

As promised, I will continue to use this space to summarize the recent content in the newsletter and update the performance of the model portfolios that I make available to newsletter subscribers. Since their March 30, 2008 launch, the (equities only, long only) portfolios have performed as follows:

*Note that the Focus Growth portfolio was retired on August 29th, largely because I was not satisfied with the recent bear market performance relative to the benchmark S&P 500 index. The new Focus Growth 2 portfolio uses an entirely different stock selection process that has consistently outperformed the S&P 500 in both bull and bear markets since I developed it approximately 3 ½ years ago.

In addition to the model portfolios, the subscriber newsletter continues to incorporate a number of regular weekly sections, including a market commentary, asset class outlook, market sentiment update, current investment thesis, and week in review. Features generally focus on subjects such as sector rotation, volatility, put to call ratios, market breadth, volume, and other sentiment-related issues. Some of the August features included:

• A New Tool to Help Predict Bank Failures
• Where Is the Safe Haven?
• VIX and T-Bill Discount Rates
• India VIX Reflects Elevated Anxiety
• A Volatility-Based Long/Short Optionable ETF Trading System
• What’s Working Right Now: the NASDAQ Arms Index
• Current Thinking on Commodities vs. Equities Battle
• Energy Sector and Commodity ETFs
• Two Very Different Metals: Copper and Gold
• Vulnerabilities Profile of Texas/Louisiana Oil and Gas Infrastructure
• Thoughts on Energy Stocks for a Gulf of Mexico Hurricane
• Tracking Hurricane Gustav
• Bond VIX Indicates Relatively Low Turmoil
• Bullish Readings from ISEE Equities Only Call to Put Ratio
• The NASDAQ-100 and Resurgent Large Cap Technology
• Strength at the Top of the NDX

Finally, I have also added a second subscriber service that I have made available only to newsletter subscribers: a volatility-based trading system that I use to identify both long and short trades on optionable ETFs. Additional information is available at the EVALS (ETF Volatility Analysis Long/Short) blog.

If anyone has any additional questions or comments about the subscriber newsletter, or is interested in a sample newsletter, please feel free to email me at bill.luby@gmail.com.

Subscriber Newsletter Features and Portfolio Performance through July 2008

One of purposes of the subscriber newsletter blog is to provide a space in which to summarize the recent content in the newsletter and update the performance of the model portfolios that I make available to newsletter subscribers. Since their March 30, 2008 launch, the four (equities only, long only) portfolios have performed as follows:

In addition to the model portfolios, the subscriber newsletter continues to incorporate a number of regular weekly sections, including a market commentary, asset class outlook, market sentiment update, current investment thesis, and week in review. Features generally focus on subjects such as sector rotation, volatility, put to call ratios, market breadth, volume, and other sentiment-related issues. Some of the July features included:

• A Speculative VIX Options Play
• A Weekday Perspective on the May to July Drop
• A Bond VIX for Evaluating Risk in Financials
• The Health of Corporate Bonds as a Market Indicator
• An Early Glance at the OVX
• Recent Sector Performance Trends (excerpted on the blog as Sector Performance in the Last Two Bull Moves)
• Should the VIX Be Spiking Higher?
• How About that VIX Spike?
• Are VIX Spikes Good Long Entries?
• Volatility Spikes and the 2002 Bottom
• Volatility and the 1998 LCTM Crisis
• A VIX:VXV Update
• The VIX:VXV Ratio Continues to Impress
• Q&A: Tweaking the PSAR for 60 Minute Bars
• Annual Volatility and Market Performance
• Technology Leadership Needed

If anyone has any additional questions or comments about the subscriber newsletter, or is interested in a sample newsletter, please feel free to email me at bill.luby@gmail.com

Subscriber Newsletter Portfolio Performance through June 2008

One of purposes of the subscriber newsletters blog is to provide a space in which to summarize the recent content in the newsletter and update the performance of the model portfolios that I make available to newsletter subscribers. Since their March 30, 2008 launch, the four (equities only, long only) portfolios have performed as follows:

In addition to the model portfolios, the subscriber newsletter includes a number of regular weekly sections, including a market commentary, asset class outlook, market sentiment update, current investment thesis, and week in review. Features generally focus on subjects such as sector rotation, volatility, put to call ratios, market breadth, volume, and other sentiment-related issues. Some of the June features have included:

• Lehman Brothers and the VIX
• XLF Put to Call Ratios
• One Enhancement to the VIX:VXV Ratio Indicator
• Volatility and Options Expiration Week
• VIX Implied Volatility Calculations
• The ISEE Equities Only Index Is Bullish
• Elevated QID Volume Levels Are Bullish
• ETF Volume: A Broader Application of the QID Theme
• ETF Volume in Financials and Other Sectors
• NASDAQ McClellan Oscillator Update
• Contrary Sentiment Analysis Revisited
• Sector Rotation: Which Will Rebound, Oil or Financials?

If anyone has any additional questions or comments about the subscriber newsletter, please feel free to email me at bill.luby@gmail.com

Subscriber Newsletter Portfolio Performance through May

As I hinted at yesterday in Portfolio A1 Performance Update: 5/31/08, PortfolioA1, which I updated here on a weekly basis from February 2007 through April 2008, has been tweaked and enhanced to create the VIX and More Focus Aggressive Trader Model Portfolio.

In fact, the subscriber newsletter has four model portfolios that I make available to newsletter subscribers. Since their March 30, 2008 launch, the four (equities only, long only) portfolios have performed as follows:

• Focus Aggressive Trader: +16.93%
  
  
• Focus Growth: +3.25%
  
  
• Focus Foreign Growth: +9.75%
  
  
• Stock of the Week Sequential Portfolio: +64.58%

In addition to the model portfolios, the subscriber newsletter includes a number of regular weekly sections, including a market commentary, asset class outlook, market sentiment update, current investment thesis, and week in review. Features generally focus on subjects such as sector rotation, volatility, put to call ratios, market breadth, volume, and other sentiment-related issues. Some of the May features have included:

• Technology Leadership Is Bullish
• New Picks from the Volatility-Based Sector Rotation Model
• Interpreting the Recent Low VIX
• An Expanded Look at the VIX:VXV Ratio
• Measuring Complacency
• ETF Reversal Swing Trader
• Trading Oil with ETFs
• Different Ways to Cross the 200 Day SMA
• The Role of Speculation in Oil Prices
• Oil, Energy, and Correlations

I continue to be pleased by the feedback from subscribers, which has included the following comments:

I really appreciate all your help and the thoughtful views you have of the market…It appears you have a knack for picking the stock of the week! -- PP, USA

You've blogged only rarely on the broader thrust of the newsletter. It comes off as applied VIX, or perhaps punches up the "..and More" part of "VIX and More". -- DK, USA

The newsletter is exactly what I am looking for. -- MD, Germany

I loved your Sunday edition. Congrats on the success of your picks. -- VH, USA

For more information on the subscriber newsletter contents, check out a blog that I have dedicated to the subscriber newsletter: VIX and More Subscriber Newsletter Blog.

If anyone has any additional questions or comments about the subscriber newsletter, please feel free to email me at bill.luby@gmail.com

Subscriber Newsletter Update

I have received a number of questions about the subscriber newsletter and I thought this might be a good time to address them.

First, thanks to all who have subscribed. I have been extremely pleased by the response to date. I appreciate all the support and am particularly encouraged by the fact that so far the renewal rate has been 100%.

In terms of content, the Sunday format has already been standardized. The typical Sunday issue is six pages long and has the following sections:

• The Week in Review – my thoughts on what constituted the important macroeconomic, fundamental, and technical news for the past week
• The Week Ahead: What to Look For – includes suggestions on earnings to watch, important government data releases, critical technical support/resistance levels, etc.
• Market Sentiment Update – a discussion of the readings and related implications from two of my proprietary sentiment indicators, the Options Sentiment Indicator (OSI) and the Aggregate Market Sentiment Indicator (AMSI). In some respects these two indicators are descendants of the VIX Weekly Sentiment Indicator (VWSI)
• Asset Class Outlook – where I update my outlook over the short-term (1-3 weeks), intermediate-term (1-3 months), and long-term (6-12 months) time frames for ten important asset classes that cover US equities, foreign equities, bonds, currencies, and commodities
• Current Investment Thesis – my take on what is driving the markets, in which direction, and why
• VIX and More Focus Model Portfolios – three different model portfolios (Aggressive Trader, Growth, and Foreign Growth) consisting of 5-7 stocks each that have returns of +18.0%, -2.7%, and +2.1% since the March 30, 2008 inception
• Stock of the Week – a single weekly stock selection that has a cumulative return of +48.5% since the initial March 30^th selection

The Wednesday issue is much more like the blog, but with a more detailed analysis and a place where I offer more in terms of conclusions and takeaways. It generally runs 4-6 pages and has three standard sections:

• Market Commentary – updates my thinking as laid out on Sunday
• Market Sentiment Update – similar to the Sunday section, but may drill down more on specific issues, such as volatility, put to call data, market breadth, volume, etc.
• Volatility-Based Sector Rotation Model – one of my current research interests is using volatility to time trades on a variety of ETFs, including sectors, geographies, commodities, and currencies. This is not a model portfolio, per se, but I have been providing commentary on what the model is suggesting in terms of sector rotation strategies, what geographies to be long or short in, as well as plays in commodities and currencies

In addition to the three standard sections, Wednesday usually includes several feature sections where the subject matter varies from week to week. Some of the features from the past three issues include:

• The VIX:VXV Ratio Continues to Perform Well
• NYSE Total Volume Suggests Rally May Have Run Out of Steam
• ‘Stock of the Week’ Averages Up 5% in One Day
• CBOE Equity Put to Call Ratio Remains Bullish (a shorter, updated version of this post went up on the blog a week later)
• A Long-Term Look at the VIX and the VXN
• Yield Curve Déjà Vu and Other Musings (a much shorter version of this post went up on the blog later)
• Is the Fed Done Cutting Rates?
• Market Breadth and Sustaining a Rally
• Highs and Lows in the S&P 500 Index

If anyone has any additional questions or comments about the subscriber newsletter, please feel free to email me at bill.luby@gmail.com

Subscriber Newsletter to Launch Sunday 3/29/08

After many requests to provide more details about my thinking vis-à-vis the markets in general and individual stocks in particular, I am launching a subscriber newsletter on Sunday, March 29, 2008. Given the recent market turmoil and the considerable uncertainty about the path forward, this seems like as good a time as any to take this step.

Targeting many subject areas covered by the blog, the newsletter will focus more on market sentiment analysis and technical analysis than on broad macroeconomic issues and stock fundamentals. In truth, my investing approach includes all four elements, but I think the macroeconomic and fundamental aspects of the market are covered quite thoroughly already, whereas good information on TA and particularly market sentiment tend to be much more difficult to find.

I am planning on a minimum of two issues per week, Sunday and Wednesday, as follows:

• The Sunday issue will provide a review of the past week and my thinking on what to watch for in the coming week. I will include my outlook on a variety of asset classes and cover new purchases and sales in three different model portfolios (Aggressive Trader, Growth, and Foreign Growth), as well as a 'stock of the week' pick. I will likely tilt toward technical analysis, charts, and market sentiment analysis, but also cover macroeconomic and fundamental issues.
  
  
• The Wednesday issue will be more of a features-based approach, but will consistently drill down on market sentiment, charts of interest, sectors and industries, and reader questions. Right off the bat, I will be rolling out a two new market sentiment indicators, which I will highlight on Sunday and Wednesday, but will likely get more attention on Wednesday. Whereas the format and content of Sunday's issue will be similar from week to week, Wednesday's issue is meant to be more free-form.
  
  
• In addition to the Sunday and Wednesday issues, there may be occasional special issues as market conditions warrant.
  

Readers can subscribe using the buttons on the upper right hand corner of the blog. Pricing is $30/month (renews automatically) or $300/year (does not renew automatically).

I encourage feedback on any aspect of the newsletter. Feel free to e-mail me at bill.luby@gmail.com.