Overall, in general the market rewarded Momentum today with Quality not far behind. That suggests we may be transitioning from quality to momentum phase with laggards up next.

OAbot rewards stocks with contracting volatility, it classifies stocks, and it grades stocks differently depending on which risk cycle classification it is in (and other data). It then looks over multiple categories and awards bonuses based upon how well each category is doing. (market cap, classification, industry, sector, above/below $10,etc)
The OAbot is not yet set up to anticipate rotations. It can either rate stocks based on “what’s working right now” (and average scores of individual stocks in categories and looking at relative volume) from a multitude of categories. Or it can give you a good picture of what is working and you can manually find some picks based upon that if you do some manual work… it will all be automated eventually so that “what’s next” also get’s rewarded. The easiest thing to improve it will be to adjust and tweak the existing formulas, the difficulty is in finding the time and setting up the formulas to pull from the necessary areas. So as of right now I have not put the required effort into making the ranking perfect just yet.
Right now, OAbot says that momentum is working in every sector today except financials where quality is still ahead by a narrow margin, and basic materials where it’s neck and neck but momentum still has the lead. So laggards as a whole may be a good spot to look, or momentum names that have not yet moved just yet.

OABOT is in the early stages of development to be able to anticipate, and can at least provide guidelines where manual work can be done to both confirm it and look at the names.

I will look at all the stocks names in each industry+category that OABOT highlights based upon it having enough stocks in each category to draw a conclusion, and based upon anticipating what is working next, after looking at what is working now. This is still very incomplete as the current version only looks at the “larger fractal’ by looking at which categories have been “working”(making extreme moves) including daily, weekly, monthly, quarterly, 6mo and 12mo returns. As such, the number of industries that qualify are always limited.

The following industries are popping up as relevant in risk rotation:
(listed by the stock type you should anticipate)
Laggards
Business Services
Medical Appliances & Equipment
Industrial Metals & Minerals
Semiconductor Equipment & Materials

Momentum
Oil & Gas Drilling & Exploration
Credit Services

Short Squeeze
Independent Oil & Gas

Full list of stocks that are in both the risk cycle and industries that you can use to anticipate according to OABOT:
http://finviz.com/screener.ashx?v=111&t=ABCO,ABMD,ACI,ACRX,ADS,AMDA,ARC,ASM,ASPS,BLOX,BTU,CARB,CASS,CATM,CNSI,COHU,CSII,CVG,CVO,CYBX,CYNO,DLX,DNN,DSS,EDAP,ENOC,ENV,ETRM,EXAC,EXLS,G,GMED,GNMK,GPN,GSM,GSOL,HBM,HOLX,INWK,ISRG,IVC,KLIC,KOOL,LDRH,LMNS,LPSN,LTXC,MCO,MDXG,MIL,MMS,NANO,NAVB,NRP,NSP,NSPR,NUVA,NVMI,NXTM,OFIX,ONE,PFMT,PFSW,PKE,PLAB,PLG,PLM,POWR,PRGX,PVG,PZG,REE,REIS,RIOM,RRD,RTIX,SFE,SMA,SNN,SNPS,SNX,SPNC,SSH,STJ,STXS,SURG,TAHO,TAS,TCK,TER,TGB,TISI,TNET,TRQ,TSRA,UMC,UPI,URG,URRE,URZ,USAT,UTEK,VALE,VASC,VOLC,VRSK,WMGI,ZLTQ,GDP,SFY,CLR,PVA,CRK,UPL,KWK,MILL,EOX,END,COF,SLM,DFS,CACC,CSH,AGM,DLLR,CSE,AXP,NBR,BBEP,VET,VNR,CRT,REXX,MHR,PWE,FXEN

When it comes to anticipating, you also have to come up with a way to anticipate a rotation of industry and/or sector…. That is a tricky task because in certain cases, the market should reward industries which are just slightly off high, other times, you want industries that are “working” right now, and other times you want the beaten down industries that have been neglected the most. I don’t know if I am sophsiticated as a trader just yet myself to really master industry rotation or how to put sector rotation into code so I’m not sure how far I can get on this regard. But I have counterbalanced OAbot answering “what’s working? and how much?” with bonuses applied after answering “What industry/sector has a high average (multiple stocks with good setups)?”

I have a feeling I’m not explaining myself very well because I don’t have the time, but ask if you have questions and I will answer when I can.

 

p.s.LANFORCE (sorry, put here strictly for traffic and page views of lanforce deprived AH members… lol)

Comments »