February 6, 2015 **Signal Change** Weekend Report

Karl's BorB Report Logo Heading

wall street bull (1)

caution

THE BULL OR BEAR DAILY REPORT

By: Karl Hormann

 (Mini-Turbo Portfolio)  Live Gains since Jan/2013: +98.67%

***

NOTE: NEW MINI-TURBO PORTFOLIO (SEE BOTTOM OF NEWSLETTER).  RETURNED +70%+ in 2013 & 24% in 2014

***

BTI Signal:  BULL-Caution

***BTI SIGNAL CHANGE***

 (BTI:  Bull or Bear Trend Indicator Signal)  Gains since Jan/2012: +22.00%

Reducing from 100% Long to 50% Long on Monday 3/9, 9:30am open

(Using QQQ & IWM)

 

March 6thOur short term oscillator picked up that something was already wrong with the uptrend when I pointed out yesterday that despite the market closing higher our oscillator still ticked lower. Sure enough economic news was released yesterday stating that we had great jobs growth in the US at +295,000 in February and the unemployment rate dropped from 5.6% to 5.5%. This knocked the stock market down sharply on the day as traders sold stock in just about every sector. Was that the right reaction?

 

You would think that a strong economy that is creating jobs is great for companies and their earnings.  We’ll in reaction to this report the US Dollar went parabolic to the upside continuing its strong uptrend, closing the day at 97.755, the highest close in over 13 years. This strong jobs data also sent short term bond rates sharply higher and commodities lower including Gold. So traders were betting on Friday that this strong report will lead to Janet Yellen rising interest rates for sure in June and that will end the Bull market. Lol.  I’m laughing at this stupidity.

 

First the unemployment number is completely bogus with labor participation at forty year lows.  So if you don’t’ count any longer thus reducing the unemployment rate, that’s good news?  I’m sure the economy did create some jobs, but most likely not the best kind of jobs. Aside from that, how high do you think interest rates are going in the future?  Sure Janet Yellen might raise rates by .25% or +.50% or even +1%.  In a massively debt laden economy that will put the brakes on middle class borrowing immediately. On top of that she is simultaneously increasing the borrowing cost of the US Government’s almost $19 Trillion dollar debt bubble. Remember the debt we have accumulated continues to grow each year. Our government is not in surplus where we are paying DOWN the debt.  And as far as the eye can see we have higher and higher obligations that are way short of revenues.  By the next presidential election will have over $20 Trillion in debt and growing.  Raising the interest rates on that debt bubble will start to compound the numbers even higher as they continually roll over the debt by issuing new debt to pay off the expiring notes. It’s a huge Ponzi scheme that requires more and more money to be printed into existence to keep the illusion going.

 

So now that traders panic sold stocks Friday, and might continue into next week they will soon realize that bonds are still a terrible investment because as 10 year treasury rates rise from 2 to 2.5% their bond values will erode by 5% or more.  Not a good trade off.  So the cash will be sitting on the sidelines doing NOTHING! Lol…  Really.  And how long do you think that will last when money managers MUST outperform markets that continue to rise due to the ever rising money supply? Not long at all.  As soon as markets bottom from this short term stupidity panic selling and start to rise again, the sidelined cash will become panicked and come crashing back into equities sending markets soaring to new highs.

 

This is why I don’t really pay attention to the short term news as being serious. Global liquidity trumps all other things at this point in history.  Even Gold’s panic selling move lower seems to be a bit short term sighted as the entire rest of the world continues to print Trillions upon Trillions of new fiat dollars into existence to pay for their bankrupt spending requirements.

 

If you look at the chart below of the Wilshire 5000 it definitely is showing we have turned negative and we could possibly see a continued move lower to some support. All we have to do is watch our short term oscillator to see where we bottom out and tick higher.  Currently we are still above the 1.0 level, so that tells us we are still in an uptrend despite these few days of weakness.  If you look at the Banking sector index chart is still looks extremely strong.  As I have said in the past, as long as the banking sector remains intact and healthy, this will tell us that the stock market and economy are on solid ground. If this banking sector etf starts deteriorating and collapsing in the future, then you know something is seriously wrong and to be very careful. For now I see just a normal market pullback occurring.

Wilshire 5000

(Wilshire 5000 Index)

 Banking Sector

(Banking Sector ETF)

 

We must continue to maintain a diversified portfolio of at least 10-20% physical Gold with some Silver.  The rest in some Core Long Term positions that we add to on pullbacks, which seem to be occurring at this time. Let’s see how far this temporary downtrend will last. Next we following our Mini-Turbo portfolio which will do fine despite uptrends or downtrends. The key is you have to ride out some of these pullbacks before we see new highs in the future. You just have to keep saving up extra cash reserves so when we do get these pullbacks, you are happy because you’re getting a discount to add to your core holdings on the cheap.  Don’t be afraid of pullbacks, welcome them as a part of the investing cycle.  Let everyone else on CNBC TV spout, end of the Bull market nonsense. We know better due to all the money being created globally. Equities must rise as a result of this money abuse. Enjoy the ride.

 

SIGNAL – Our BTI Signal just changed from 100% Long “BULL” Signal to a “Bull-Caution” 50% Long position for Monday’s open. Our BTI System allocated funds will be reduced to 50% Long. This trade is only for our BTI signal allocated funds. (I allocate 1/4 of my account to trading along with the BTI Signal.) The rest of the portfolio is made up of Long Term Core holdings which we do not sell, like IYM, Berkshire Hathaway (BRK.B), CVY, DVY, IWD, etc.. and our Mini-Turbo Portfolio.   We continue to hold all Long Term CORE positions.

Short Term Trend Oscillator, Today:   1.17 (Trending Lower)

3/5: 1.30,     3/04: 1.33,     3/3/: 1.40,     3/2: 1.43,     2/27: 1.40,     2/26: 1.42

(.65 oversold to 1.6 overbought range)

 

Remember, I try to hold off on adding to any Long Term Core positions with cash you may have until the short term trend oscillator reaches under 1.0, bottoms and starts to rise again.  I have seen this indicator bottom at .98 and I have also seen it bottom at extreme selling in the past 15 months near .67.  So it’s up to you where you decide to nibble and add at your Core positions.  But as long as it’s near an oversold area I would not worry since these will be multi-year or decade holdings.  Just watch the short term trend to pick your spot.

 

Check out my many recommendation at the bottom of my report to get ideas on what you could pick from to diversify your portfolio.

http://www.usdebtclock.org/

*We continue to hold our Long Term Core holdings which should account for about 66-70% of your portfolio.*

 

Note:  My portfolio is made up of 70% Core long term positions with dividend paying ETF’s and stocks, Gold/Silver per my sample portfolio & the other 30% to my BTI Trend signal.

The 30% of my portfolio that is dedicated to the BTI signal I trade 50/50 between QQQ & IWM (Russell 2000 etf) so half of my position has less exposure to Apple and more exposure to smaller cap stocks.  IWM will usually appreciate higher during Bull markets that we expect to be continuing like the one at the moment. Depending on the size of your portfolio you can cut down your holdings to less until the funds grow or you continue to contribute to your savings/investment account.

** Any last minute evening Signal changes will be emailed to you by 7:30am the next morning via auto alert update.

 

GOLD/SILVER—  Gold took a large hit on Friday based on the extremely strong US Dollar. There was nothing shocking about that. Now you know why I continue to stress that we have to stay diversified.  Sometimes these trends can continue for longer than you think and go much further. How high can the US Dollar go?  We are currently at 97.755, can it cross over 100? As long as Janet Yellen keeps threatening higher interest rates, while at the same time countries around the world like Europe, Japan and China are lowering their interest rates and launching new QE operations, the US Dollar will continue to strengthen. Eventually this has to end, and when it does we should see the rise of the new commodity bull market. Until then just fasten your seatbelts because this is going to be a bumpy ride.

 

I continue to believe with all the monetary global printing metals and most commodities will resume their bullish move higher all in good time.  I continue to watch and wait patiently with our precious metals holdings.  Just remember to keep your allocation of Gold/Silver and some miners to less than 20% of your portfolio.  We don’t know the future and don’t want to get over invested into any one sector.  In my view Gold is a form of currency that is timeless. If you add to your holdings on a regular basis it is a good savings plan.

 

We continue to hold all our metals (20% maximum of our portfolio) and very small mining positions if you have any.

Oil ETF complex I like: USO, XLE & IEZ.

Shopping list:

SLW  (I continue to hold some shares)

SSRI, GDX, SIL, EXK, IAG,

Keep the total of any of these trades to under 3% of your portfolio value if you do decide to get involved.  See my sample sector allocation section of the web site to see how much you should have total exposure to Gold/Silver and miners.

 

FINAL THOUGHTS—  As you see I am bullish on equities because of one driving factor. Money creation around the world is in hyper drive. This is leading to increased spending by governments and billionaires. In turn it leads to higher corporate revenues, stock buy backs, increased valuations and thus higher share prices. So if we want to grow our wealth, we have to own investments that will rise in value.

 

At the same time I am very fearful of the future of our country. Our politicians continue to make insane financial decisions that are burying our country deeper and deeper into unpayable debt. We are already at the point of no return regarding debt repayment. But our politicians seem to either not care, or realize that there is no way out so we continue on with business as usual like they have been doing for the past twenty years and things will probably just continue. But that can’t go on forever. Eventually the debt will become so large that it will threaten the entire system as we know it. It’s a scary future I can’t believe is happening as we speak.

 

At the same time China is expanding their financial power across the globe, setting up currency exchanges, bond exchanges, expanding their stock market, purchasing up commodity miners and hoarding Gold at the fastest rate in decades. I eventually see China coming up with some sort of Gold backed currency that will challenge the US Dollar as the global reserve currency.  It’s only natural. Global reserve currencies go to the countries that produce all the goods. Early on it was England, then after it switched to the US Dollar as we because the manufacturing powerhouse of the world and exported to everyone. Now the US is decaying, debt is piling higher and China is manufacturing almost all the goods for the world. So who do you think will be the next world reserve currency in the near future?  It’s only natural that it will be China or a mix of manufacturing countries with China as the epicenter.  You can also see it in China’s increasing military equipment and air skirmishes with neighboring countries. It’s only a matter of time everyone.

 

This is why we continue to hold our 10-20% physical Gold/Silver insurance policy in our portfolio. Because when that day comes, the US Dollar will collapse suddenly and swiftly as it becomes re-priced based on this new realization. Just look at other currencies around the world that were suddenly revalued overnight based on a change of policy or debt explosion. The moves are sudden and HUGE. Due to the Trillions in derivatives piled on top of these currencies, the moves are even more extreme.
How long until this currency change occurs? I really don’t know as this is just speculation at the moment. But you can see China putting the pieces into place preparing for that eventual implementation. So stay bullish on the stock market and keep saving, but definitely pay down debt as soon as you can because when this event happens it will send the United States into a massive recession or even depression. This will destroy anyone who is in extreme debt and does not have enough reserves or income to service it during those tough times.  Use this calm in the economy to your advantage to set yourself up on sound financial footing. Time is ticking.

 

I hope you all have a great weekend and I’ll see you back here Monday for our mid-week shorter updates.

Karl Hormann

The Bull or Bear Report

(Newsletters put out every evening before 8:45pm daily.  You will receive email notification once posted. If you did not receive the notification just login to the website.)

 

MARKET UPDATE:  

Dow:  Down -278.94  (-1.54%) 17,856.78 (BULL)

Transports:  Down -96.16  (-1.07%) to 8,907.41

NASDAQ:  Down -55.44 (-1.11%) to 4,927.37

S&P 500: Down -29.78  (-1.42%) to 2,071.26

Gold:  April Gold Down -27.50 (-2.30%) to 1,168.70 (as of 6:00 pm EST.)

Silver:  March 15 Silver Down -.213 (-1.32%) to 15.945 (as of 6:00 pm EST)

US Dollar Index:  Up +1.361 (+1.41%) to 97.755

Crude Oil Futures:  April 15 Down -1.19  (-2.23%) to 49.78/barrel

Decliners beat Advancers (from 8K+ stocks) by: 5,739 decl. to 1,665 adv.

 

Our Recommended Popular Holdings: 

QQQ   Down -1.06 (-.98%) to 107.58 as of 4:00 pm (BULL)

IWM   Down -1.37 (-1.12%) to  121.35 (Russell 2000 etf)

IYM  Down -1.24 (-1.45%)  to 84.23 (Good long term Core position. Basic Materials etf)

MOO  Down -.65 (-1.19%) to 54.18   (Good Agriculture industry holding)

GDX   Down -1.39 (-6.92%) to 18.69 (Large Gold mining etf)

SIL   Down -.33 (-3.64%) to 8.73  (diversified way to own the Silver miners.)

GLD  Down -2.90  (-2.52%) to 112.10  (or you can substitute with:  SGOL)

BRK.B:  Berkshire Hathaway’s Class B Shares. [12-15 month target:  $190.00]

July 31st at: $116.21,     Sept. 24th at:  $115.05,     Oct. 9th at:  $111.77   (Book Value: 1.36),      November $114.87,      December 7th at: $116.62,   Feb 5th 2014 at: $108.83,  Mar 5th 2014: $119.02  April 18th $127.18,        May 7th 127.50 ,                June 25th  127.13,           July 15th $128.45,        August 19th $134.90     Sept 16th $138.80           Oct  17th  $137.40,           Nov 13th $146.28,   December 23rd $151.52,  Jan 23rd $149.08,   Feb 17th $149.16

**BRK.B IS A GREAT CORE HOLDING FOR LONG TERM AND FOR PEOPLE WITH LIMITED FUNDS THAT CAN ONLY HOLD A FEW POSITIONS.  BUY ON THE DIPS AND HOLD.  Berkshire is a great buy at a Book Value at under 1.1 to 1.2***

Other good diversified Conglomorates like Berkshire but a bit riskier are: LUK, Y, SEB & APLCY

iShares Russell 1000 Value ETF:  IWD  (pays 2% dividend)

       Oct 17:  $89.25,      Nov 21: $92.37,    Dec 28: $93.74  April 4: $96.43

 

Healthcare ETF’s below. (Great for Core position holdings)

XHS at $75.36 on 4/25/13 (Health Care Services etf. I like more.  Good Core holding)

IYH   at $100.00 on 4/25/13 (Health sector such as J&J, Pfizer, Amgen…, Dividend: 1.42%)

 

(IWD & CVY highly recommended for diversified safer yielding ETF)

CVY  (Guggenheim Multi Asset Dividend ETF)  Very Good.  Dividend yield around 5%.

DVY   (another great dividend earning etf)

IWD  (Russell 1000 Value Fund. Pays 1.9% dividend while giving you exposure to equity inflation)

VYM  (Blue Chip high yielding stocks etf)

XLE   (Energy Sector ETF.  Good on pull back’s for rising energy exposure. Pays +1.68% div.)

 

Extra Suggestions (Undervalued Dividend Payers) :

BGCP:  Target  $10.50  (Real Estate broker play) Dividend 6.7%+  (Stop close below $6.88)

EXG:   Target  $12.00 (Global High Income Fund) Dividend  10.22%  (Buy under $11.00 on dips)  we are up +13.68% since 7/15/13.

HMC  (Honda Motorsport):  Long, Target: $55.25; (Stay out under $32.50)  Pays 2.39% dividend

CHK (Chesapeake Energy): Target: $41.00  (stop: Stay out below $26.00)  Pays 1.24% Dividend)

NYMT (NY Mortgage):  Buy near $7.58,  Target: $10.00,  **14% Dividend Yield** (I will advise if this is removed from my list)

TGP (Teekay LNG Partners): Buy under $45.00, 6.49% dividend. (I will advise of changes)

NSLP (New Source Energy Partners): Buy under $24.00, 3.51% dividend, (Fair value: $27.00+)

NRF (NorthStar Realty):  Target: $23.26  (pays 11.27% dividend). Rental properties in Tri-state area, along with high end hotels and a portfolio of rental backed mortgages.

 

Little Riskier Bank/brokerage plays below

KKR:  Target: $34.00,   Dividend: 6.91% (Stop: stay out below $22.05)

BX:  The BlackStone Group,  Target: $49.50 , (Stop: stay out below  $29.50)

 

HIGHER RISK MINERS & OIL PICS

Sandridge Per.Trust (PER):  Target: $10.00,  dividend suspended. (Speculative hold.)

Allied Nevada Gold (ANV):    VERY RISKY NOW. Too much debt.

 

Abbott Laboratories (ABT):  Target:  $45.04,  Dividend 1% only.  Recommended at $33.79.

Current price: 45.68 on 11/25/13  (Stop: Close position if below $40.90)

 

MSB, BGCP, TAL (high debt but stable shipping transport business) riskier,

* FDL (First Trust Morningstar Dividend Leaders Index ETF) yields 3.5% from Blue Chip large caps.  Good to buy AFTER major market corrections.  Very conservative income generator.

 

IMPORTANT NEWSLETTERS BELOW FOR QUICK REFERENCE 

July 20th 2012: Real Estate Special Discussion Edition

Nov 19th 12012: How to insure your portfolio

Nov 6th 2012: How to make $200K per year

 

*****TURBO MINI PORTFOLIO STRATEGY*****

Check out my new mini portfolio below called TURBO MINI STRATEGY.  It’s a purely mechanical computer generated investment model that picks superb S&P companies that have positive cash flow, positive earnings, accumulating interest and are leaders in the S&P for growth. This is a bit more of an aggressive portfolio, but if you have a large investment account then it could be a great way to supercharge a portion of those funds.  Last year in 2013 it only made about 6 trades and currently holds the 5 stocks listed below.  I will list the changes as they occur in 2014. Of course past performance is no guarantee of future results, but if the Fed will continue to print to infinity or face collapse, you can guarantee these monster growers will continue to accumulate the worlds growing cash supply and cause their stock to rise further.  And if one company fails to perform or falls off of its many growth criteria, that particular holding gets cut and replaced with another up and coming company.  I’m very excited about this new addition to our Bull or Bear Report.  Good luck, stay diversified and invest safely.

I will update these as changes need to be made. I will make a note at top of newsletters to changes to TURBO MINI PORTFOLIO.

TURBO Mini Portfolio G/L for today 3/06/15:  (-1.41%)

Portfolio Gains from 1/1/13- 3/06/15:   +98.67%  (live trades)

AZO: Autozone,  Long 11/12/13  @ $448.27:   +43.93%

BLK: Blackrock Inc., Long 11/13/14 @ $350.32:  +4.29%

BIIB: Biogen Idec,     Long 1/8/15 @ $359.42:  +16.16%  

REGN: Regen Pharm.,  Long 1/22/15 @ $419.08:  +.73%

GOOGL:  Google Class A, Long 2/13/15 @ 547.65:  +4.61%

(Portfolio Graph I will post each weekend.)

ScreenHunter_724 Mar. 06 18.36

 

HISTORICAL TRADES BELOW for 2014+

2/13: Bought (GOOGL) on open @$547.65

1/22: Bought (REGN) on open @$419.08

1/15: Sold (UNP) at EOD @ $110.80 (below our trailing profit stop)

1/8:  Buy (BIIB) on open @359.42

1/5/14: Trailing Stop Hit (AAPL) @108.00

11/13/14: Bought (BLK) on open (9:30am) @ $350.32

10/13/14: Sold (ACT) on open (9:30am) @ $224.38

10/9/14: Sold BX on open (9:30am) @ $29.95

9/2/14: Buy ACT on open (9:30 am)  @227.07

7/17/14:  Sell to Close GWW (Grainger) at (9:30 am open price) @$242.25

6/27/14: Buy Long BX (Blackstone Group) at (9:31 am open price)

6/27/14: Sell Entire PCP on open (9;30 am) sold @ $251.34

6/6/14: Buy PCP on open (9:30 am) $270.08

6/6/14: Buy GWW on open (9:30 am) $265.45

4/23/14: Covered Short GDP on close (4pm)  26.44

4/16/14: SHORT GDP on open 4/16 (9:30 am) 24.85 Open.

4/16/14: SELL WYNN at open 4/16 (9;30 open) to close position.

*****

4/9/14: COVER OFIX at open 4/10 (9:30 open) to close.

4/7/14:  SHORT OFIX at open  4/7  (9:30 am open) to open

4/7/14: SELL GOOGLE at open 4/7 (9:30am open) to close.

3/25/14: Replaced Priceline with (UNP) Union Pacific at 9:30am open price

3/24/14:  REPLACED NETFLIX with  (WYNN) Wynn Resorts Ltd. at 9:30am open price