Weekly Market Assessment
Let the jawboning begin! Just one week after making the decision to keep rates low, Janet Yellen said in a lecture at UMASS that "it would likely be appropriate to raise rates from near zero, sometime later this year, though the decision would continue to rely on economic data." Well how can we go from being solely data dependent to now just saying rates could raise in a short few months. I believe "they" the Federal Reserve have again resulted to verbally telling the market what may happen and looking to see how the market will react. Her comments also lets the market know that they wanted to raise rates however economic conditions did not fall within their realm of being an appropriate time. So we are again waiting to see what they will do. However waiting till December to raise rates, which I believe wont happen, will put many countries, sovereign wealth funds, investment firms and any other financial instrument that relies on the U.S. Federal Funds Rate in a tough spot with little time to adjust before the turning of the year. So, I now wait like everyone else to see if my understandings as to how certain markets work and how the Federal Reserve reads these markets as it relates to their policy decision, will now come under the microscope.
We left the third quarter as the worst financial quarter in four years! However October has been know as the Bear killer, meaning those that are short the market have no choice but to cover at a loss and watch as the market moves higher! True to its past October was the best month in four years! The S&P 500 and Dow returned ~9% while the NASDAQ returned 10%. Crazy... yes, however in a secular bull market, corrections are needed for the market to reset itself and rest before a move higher. Amazing how quick things can turn in the market when everyone is determined to see it fall only to watch it regain strength and return to its record levels. We enter the fourth quarter with one last major Monetary Policy meeting and of course all the pundits and media talking heads will be saying that this is the most important Federal Reserve meeting ever! Will this past short term correction fuel the market to push itself into new all time record highs, or will the market remain flat waiting to see if the almighty Federal Reserve will deliver what the market wants. Have they been too dovish for too long or has their policy on being data dependent proved right that rates have remained at these levels to help the economy along and out of the Great Recession?
Making the Watchlist: Below are the stocks that I will be looking at over the coming months. I will provide the the current stock price and why I am watching them. I will comment on them as I continue to keep an eye on them. You will be able to see and follow their growth and/or decline. Chart links may be attached.
See What I'm Trading:You can now view all my real-time trades by following this link, BlackPacific Capital1 and BPC2 This new site shows my trades, in real time the minute they are bought and sold. Below you can also click on the stock symbols, trade strategy or prices which will lead you to this new site. The site offers a full risk/return profile and video detailing the strategy of the trade. Note: When looking at the option positions every contract equals 100 shares.
BlackPacific Capital has created three funds. The first is the Total Return Fund and the other is the Growth Fund. Both of these funds will be compared against the S&P 500. Both will hold a total of no more than five companies each. The Total Return Fund is a low turnover fund where every holding must have a dividend and be undervalued to its peers. The growth fund is made up of momentum high growth stocks where the turnover rate is much higher. Below are their Weekly and Year to Date returns. For more information click here.
New holdings and liquidated positions: -10/26 Valeant Pharmaceuticals (VRX) has been added to the Growth Fund at $95.35
Total Return Fund Return
Year to Date: 1.27%
Year to Date: 2.49%
S&P 500 Return
Year to Date: 1.21%