The Madison Letter Weekly Update

Since inception, our overall timing return is 76.78% versus 44.71% on the S&P 500 for excess return of 32.06%.

Madison scores on the major indexes are in a wide range from -13 to -10. Stocks and indexes have fallen in the past week.

The range between the buy and sell points is now average. As an example, the S&P 500 range was 68 points at the low and is now 98 from 104 points a week ago. As volatility rises, this expands. Witness at the October low the range was 169 points.

Also, in tracking the range between the 2 year and 10 year is now 138 basis points. Short term rates are on the rise while long term have fallen. This needs to be watched. There are implications.

There are now two open positions, a buy on TRF and a buy on USO. We began to offer a buy and sell strategy via our Madison Market Timing Indicator at the beginning of April of 2007. There are now 24 open and closed winning trades to 8 closed losing trades with our market timing results. This column replaces the Morning Matters on Fridays.

Weekly Charts Updated

We are going to continue making Thursday our chart section in only Superstock. That said, we are changing the format. If you want to follow the S&P 500, then you will need to sign up for www.superstockinvestor.com at the website. Each week in Superstock we track the S&P 500, NASDAQ Composite, Russell 2000, Emerging Markets (EEM), 20 Year Treasury (TLT), U.S. Dollar (UUP), High Yield Bonds (HYG) and Corporate Bonds (LQD). This alone is worth the price of the service as signals on the NASDAQ Composite returned 15.65% versus the index return of 18.93%.

 Last week we focused on the iShares Barclays 20 year Treasury Bond Fund ETF (TLT) as we sold out of puts in Options Index Trader just in time.

It remains in an uptrend that refuses to break and is a dollar higher than a week ago.

tlt

 Potash (POT) has been weak recently and our indicator did a nice job of catching the downtrend. We would not commit new funds to this name right now.

 pot

Portfolio Update

The S&P 500 for now has peaked out at current levels. The portfolio remains 50% invested long, 0% short and 50% in cash, net long 50% with profits taken most recently in Red Hat(RHT). We are now at a value of 1019.14% from 1014.72% through Monday. We finished the year at a value of 951.10 up 29.86% for the year. Our current value is 1019.14% which puts us up 68.04 or 7.15%.

Below are the year by year results on a cumulative and absolute basis:

ssi ytd

IMG SRC=”/ssi/images/mbr/morningmatters/2015-03-24/” width=”” height=”” alt=”” border=”0″

It appears for now that 2100 on the S&P 500 has become support and 2150 is resistance. We are now at 2104 which is higher from a week ago.

Remember these returns are total returns with the average change for all winners and losers is 9.10% per idea. Our batting average of closed winners and losers is 70%. The portfolio is up to a value of 1019.14%and from inception when it began at 0% in April of 2008. The performance on the Uncommon Wisdom Daily Portfolio Tracker is a bit higher due to dividends which they add in. We have never added in dividends so our weekly results are understated since 2008.

The Russell 2000 is beating the S&P 500 on a daily basis.

The Week Ahead

1.Geopolitical and Fiscal Events. Monday sees Federal Reserve Vice Chairman Fisher speak as well as Cleveland President Mester and San Francisco President Williams speak. German Chancellor meets with Greek Prime Minister Tsipras. Tuesday sees Federal Reserve St. Louis President Bullard speak in London. Wednesday sees President Obama meet with Afghanistan President in Washington D.C.

2.Economic Releases. Releases of note this week include the weekly chain store sales, oil/gas numbers, mortgage applications and existing home sales, CPI, new home sales, durable goods, Q4 GDP and Michigan Sentiment.

3.Earnings Releases. Notable releases include PWRD FMSA MKC IHS PAYX RHT CAN CCL BBRY FINL

Weekly Charts Updated

We are going to continue making Thursday our chart section in only Superstock. That said, we are changing the format. If you want to follow the S&P 500, then you will need to sign up for www.superstockinvestor.com at the website. Each week in Superstock we track the S&P 500, NASDAQ Composite, Russell 2000, Emerging Markets (EEM), 20 Year Treasury (TLT), U.S. Dollar (UUP), High Yield Bonds (HYG) and Corporate Bonds (LQD). This alone is worth the price of the service as signals on the NASDAQ Composite returned 15.65% versus the index return of 18.93%. 

Last week we focused on Red Hat (RHT).The slope of the 50 day moving average peaked in January and is now negative. We recommended to avoid for now last week. It was at $65.12 and closed Wednesday at $67.07. It remains a struggle.

 1

This week we are weighing in on iShares Barclays 20 year Treasury Bond Fund ETF (TLT) as we sold it out of our Morning Matters Portfolio just in time. It remains in an uptrend that refuses to break.

2 

Update On The Retracement Levels

It has been a while since we have needed to update the retracement levels. The S&P 500 has tested its 38.2% and 50% retracement levels from the January low to the February high. The S&P 500 is struggling so now it is time to look at its retracement levels.

[Image 1]

Through yesterday’s close the S&P 500 via SPY has now moved back above all its retracements from from the January low to the February high. Pay attention to 2066.61 which is the 38.2% retracement on S&P 500. The 50% and 61.2% retracements come into play pretty quickly and could be challenged tomorrow if the market does not like the Federal Reserve Open Market Committee (FOMC) comments at 2:00 p.m. EDT onward.

The S&P 500 is now just up 0.75% for the year through last night’s close. The peak for 2015 was 2.84% on March 2nd.

Last year the under performance was in the Russell 2000. Year to date the Russell 2000 is up 3.11% We have moved the Morning Matters Portfolio to 50% cash until we feel that the current weakness is ready to right itself. Unfortunately, we are not there yet. We remain diligent in watching for the end to nastiness.

Portfolio Update

The S&P 500 for now has peaked out at current levels. The Nasdaq Composite meanwhile failed at 5000. The portfolio remains 50% invested long, 0% short and 50% in cash, net long 50% with profits taken most recently in Red Hat(RHT). We are now at a value of 1014.72% from 1005.28% through Monday. We finished the year at a value of 951.10 up 29.86% for the year. Our current value is 1014.72% which puts us up 63.62 or 6.89%.

Below are the year by year results on a cumulative and absolute basis:

1

It appears for now that 2050 on the S&P 500 has become support and 2100 is resistance. We are now at 2081 which is +2 points higher from a week ago.

Remember these returns are total returns with the average change for all winners and losers is 9.06% per idea. Our batting average of closed winners and losers is 70%. The portfolio is up to a value of 1014.72%and from inception when it began at 0% in April of 2008. The performance on the Uncommon Wisdom Daily Portfolio Tracker is a bit higher due to dividends which they add in. We have never added in dividends so our weekly results are understated since 2008.

Below are recent closes since mid 2013. 

2

The Week Ahead

1.Geopolitical and Fiscal Events. Monday sees Euro-zone Finance Ministers meet to discuss Greece and German Chancellor Merkel meet with Ukraine President Poroshenko in Kiev. Israel holds elections on Tuesday. Bank of Japan issues its latest interest rate decision on Tuesday. The FOMC completes its two day meeting and Chairman Yellen holds a press conference on Wednesday. The OECD updates its economic outlook on Wednesday. Friday sees Federal Reserve Atlanta President Lockhart and Chicago President Evans speak.

2.Economic Releases. Releases of note this week include the weekly chain store sales, oil/gas numbers, mortgage applications and industrial production, housing starts and Philadelphia Fed Survey.

3.Earnings Releases. Notable releases include QUNR NOAH ORCL ADBE FDX GIS NKE LEN TIF DRI.

Weekly Charts Updated

We are going to continue making Thursday our chart section in only Superstock. That said, we are changing the format. If you want to follow the S&P 500, then you will need to sign up for www.superstockinvestor.com at the website. Each week in Superstock we track the S&P 500, NASDAQ Composite, Russell 2000, Emerging Markets (EEM), 20 Year Treasury (TLT), U.S. Dollar (UUP), High Yield Bonds (HYG) and Corporate Bonds (LQD). This alone is worth the price of the service as signals on the NASDAQ Composite returned 15.65% versus the index return of 18.93%.

 

Last week we focused on the breakdown in the Utility sector via XLU.The slope of the 50 day moving average peaked in late December and is now negative. We recommended to avoid for now last week. It was at $44.38 and closed Wednesday at $43.11. 

1

This week we are weighing in on Red Hat (RHT) as we sold it out of our Morning Matters Portfolio just in time. There could be more downside ahead.

Next stop $62? 

2

Portfolio Review

The portfolio moved to 50% invested long, 0% short and 50% in cash, net long 50% with profits taken last week in Red Hat(RHT) up 41%. We are now at a value of 1005.28% through Monday. We finished the year at a value of 951.10 up 29.86% for the year. Our current value is 1005.28% which puts us up 54.18 or 5.38%.

Below are the year by year results on a cumulative and absolute basis:

ssi ytd

It appears for now that 2050 on the S&P 500 has become support and 2100 is resistance. We are now at 2079.

Remember these returns are total returns with the average change for all winners and losers is 9.00% per idea. Our batting average of closed winners and losers is 70%. The portfolio is up to a value of 1005.28%and from inception when it began at 0% in April of 2008. The performance on the Uncommon Wisdom Daily Portfolio Tracker is a bit higher due to dividends which they add in. We have never added in dividends so our weekly results are understated since 2008.

The A/D line signal went to cash Monday at the close.