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Archive for April 8th, 2012

Apr
08

The Weekend Trader – PivotPoint Advisors Update

Posted by: Don Miller | Comments Comments Off

This week’s Briefing is now available on the Briefing Page of the PivotPoint site.

For readers new to the Briefing, we use the weekly report to continue our mission of full transparency by describing both current technical conditions and how we’re positioning client portfolios.

An excerpt from this week’s Briefing describing our choice to avoid the typical “April Fools” retail rally is as follows:

Technical Perspective:

The major equity markets continued their trading range action in yesterday’s holiday-shortened equity trading week, however action in the S&P futures markets – which were open for a portion of Friday morning while the equity markets were closed for Good Friday – reacted strongly negatively to Friday’s disappointing payroll report as futures prices plummeted about 1% as noted by the superimposed black circles in the above charts.

Such closing-week futures action suggests that the first substantial correction and wholesale buying opportunity since early March may be unfolding, which would provide the impetus for a deeper price retracement and improved wholesale portfolio positioning as we’ve highlighted in the recent Briefings.

Prior to Friday’s futures action, the major markets had begun the week in true “April Fools” fashion as “late-to-the-game” retail investors used the strong Q1 performance to buy Q2 funds in mass, while smarter firms were selling into the temporary carry-over strength.  Based on Friday’s closing futures prices and assuming some follow-through in Monday’s equity market, such purchases would begin the second week of the new quarter with an approximate 3% loss.

Portfolio Impact:

In last week’s Briefing, we indicated, “With respect to current positions, we’ve moved client equity positions to the sidelines and will continue to seek improved wholesale opportunities for re-entry resulting from either (1) short-term price discounting so long as uptrends and key support levels remain in tact, or (2) sustained price consolidation followed by continuation triggers signaling potential additional upward legs.”

Despite Monday’s interim rally, we held firm to such a perspective and thus maintained our cash positions throughout the week as our models and judgment indicated that the risk of “buying high” simply exceeded the likelihood of further price increases in the short term.  By Friday’s end, such action proved highly prudent as we successfully dodged the early quarter losses experienced by many retail investors.

As we head into the second week of the quarter, we continue to hold firm to last week’s plan as noted above, and anticipate that opportunities to re-establish equity positions at better prices and with improved potential will surface.

Have a Blessed Easter!

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