LOOKING FOR A TOP PERFORMER IN THE CURRENT MARKET.
Written by: Robert and Russell Markham
The market is still looking for a bottom. The MTI and RT for the market are still in a strong downtrend as of 26th November. The lower this market goes, the more explosive the rally is likely to be. Many of the top Bluechip companies we have identified over the months and years have not seen their earnings decline. Rather, their earnings have powered up. Dr. DiLiddo summed it up well in the US essay on the 16th of November where Dr. DiLiddo noted:
“I can’t help it when a majority of investors believe earnings will be lower when they’re still rising, and they take the market down for the wrong reasons. I don’t move the market and I don’t fight the market. Their Perception Is The Reality.”
Investors out there are not necessarily looking at what is taking place, rather it appears to be the perceived outcome. When sentiment turns, and money comes back into the market, watch the companies with rock solid earnings. These are companies likely to spring back up. I made a list of a few of these companies in my essay on the 19th of October. It has been a fair wait in this Confirmed Down, C/Dn, and we are still waiting for that Confirmed Up, C/Up, signal. Please note, I now have removed LLC.AX from the list I noted on the 19th since the earnings have fallen and LLC.AX has therefore not met the conditions as noted.
I want to dig a bit further to see if I can identify any additional stocks to consider when the next C/Up signal takes place. For this exercise, I am going to base this on what is running well right now in the current market. If I head over to the HomePage, as of 26th November, I can see there are currently only 60 Buy Rated stocks in total (per the VectorVest at a Glance gadget on the HomePage).
Of the 60 Buy Rated Stocks, which ones are holding up? Recall, to get a Buy rating: A share must have a VST score above 1.00, RT must be above 1.00 and the share Price must be diverging away from the Stop Price we calculate each day.
To get a Sell rating, the share Price simply has to fall below the Stop pPice we calculate each day. The stop price is a line in the sand. Your BackTesting portfolios may provide a more aggressive stop-loss that you have perfected.
To Get a Hold rating, the share is not meeting one of the criteria required for a Buy rating. Typically the reason is that the share Price is converging towards the Stop Price and/or RT is below 1.00.
To do my analysis, I am going to use UniSearch which will make this quick and easy. I am going to build a simple search. To create a new UniSearch (identify the page icon per the top left of the UniSearch tab, to the right there is a dropdown arrow, click on the arrow and select New Search). This will create a new template for you to add your search parameters. In the Parameter box, select Stocks, then Capital Appreciation and then select RS – (Relative Safety). Set the Operator to >= and in the Value box, type 1.20. I want solid financials and a score of 1.20 or greater ensures this. In the next Parameter box, select Stocks, then Capital Appreciation and then select REC (Recommendation). Set the Operator to be = and the Value to be Buy. Leave the default sort at VST DESC.
Only 1 stock is returned, that being GMG.AX. Of the 60 stocks with the B rating, this stock is the only stock that meets the criteria. If I look closer at GMG.AX, the RV, RS, RT and VST scores currently stack up well. The stock is slightly Overvalued, but not by much. Relative Timing (RT) has been holding up at 1.00 or higher since 14th February this year. EPS has been steadily increasing too. It will be interesting to watch GMG.AX when the C/Up takes place. So far, it has held up very well in the C/Dn.
GMG.AX has performed well in recent times, but a word of caution. GMG.AX does not have the 5-year earnings profile consistency per the stocks identified in the essay on the 19th. Nevertheless, this company has proven itself in the current market. Since the C/Dn on the 13th of September, this stock has gone up 1.69% while the VectorVest Composite (VVC/AU, that being the indexed average of all the stocks we track) has fallen by 7.67%. GMG.AX will be another stock making my WatchList for stocks to consider in the next C/Up.
DISCLAIMER: THE ABOVE ARTICLE DOES NOT CONSTITUTE FINANCIAL ADVICE. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. YOU SHOULD CONSULT WITH YOUR LEGAL, TAX, FINANCIAL, AND OTHER ADVISERS PRIOR TO MAKING ANY INVESTMENT.