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  Analysis: II Highlight   Archive

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II Highlight 
8 September 2011
Welcome to the September edition of II Insight
 
The start of this month turned out to be just as tumultuous as August.  What's more safe haven assets are falling by the wayside. Gold is struggling at its August high and the Swiss Franc is being devalued by intervention from the Swiss National Bank. Most equities remain volatile with many now entering bear markets. So where can one invest and still sleep at night?
 
Our mystery chart “Y” is one suggestion. It depicts an easily investable asset class versus the S&P 500 and over the long-term it outperforms by a wide margin. It's relatively resilient to market shocks and what's more offers a decent income stream. Read on to discover our mystery chart for asset “Y”.
 
In this month's report we also review recent results from our Advisors Sentiment Survey as a key spread reaches an important juncture.
 
Tarquin Coe
 
Our Advisors Sentiment Survey for the first week of September showed an erosion of optimism down to a key level. This reference point has proved to be a buy signal in the past three years.
 
The difference between the bulls and bears contracted to +1.1%. Typically when the spread falls to around the “zero” level equity markets bounce. On the chart we have annotated each previous occasion since the March 2009 bottom when the spread has dropped to zero. Each occurrence was followed by a rally of at least 4 weeks in duration.
 
However, all bets would be off should the spread breach the zero level. A sustained break would be evidence that equities were indeed in a bear market. Should this occur, the deeply oversold levels (negative values) such as were seen at the tail end of 2008 or 2002 will be the point from which a significant recovery rally can emerge. However, such low levels of sentiment would likely be associated with lower levels for stocks.
 
This indicator will be one of the key metrics to watch over the next few month. For further details on our Advisors Sentiment Survey and to subscribe, click here.
 
Drum roll… our smoking hot
mystery chart is…if you haven't guessed already…the Tobacco sector!
 
Our website contains a hundred or so sub-sectors and all can be charted. The tobacco group contains eight stocks: Alliance One International (AOI), Altria Group (MO), British American Tobacco (BTI), Philip Morris (PM), Lorillard (LO), Reynolds American (RAI), Universal Corp (UVV) and Vector Group (VGR).
 
The dividends from these stocks are amongst the biggest out there. Altria Group (MO) for instance pays 6.1%. The P&F price and relative charts for the stock are mind boggling! Versus the S&P 500 MO has outperformed by 650% since March 2000 and that doesn't even consider the dividend income!  MO was rated as a strong buy in the Coe Report on September 9th.
 
Subscribers can chart these stocks as well as over 5000 others. Subscribers also receive buy and sell suggestions. Across our US portfolios we are already in Reynolds American, British American Tobacco and Lorillard (and have been for some time).
 
Details on our US stocks service (which includes access to our stock database) can be found here.
 
Disclaimer
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This report has been produced and compiled by Investors Intelligence, a division of Chartcraft Inc, and is provided for information purposes only. Under no circumstances is it to be used or considered as an offer to sell, or a solicitation of any offer to buy. While all reasonable care has been taken to ensure that the information contained herein is not untrue or misleading at the time of publication, we make no representation as to its accuracy or completeness and it should not be relied upon as such. From time to time Chartcraft and any of its officers or employees may, to the extent permitted by law, have a position or otherwise be interested in any transactions, in any investments (including derivatives) directly or indirectly the subject of this report. Also Chartcraft may from time to time perform other services (including acting as adviser or manager) for any company mentioned in this report. The value of securities can go down as well as up, and you may not get back the full amount you originally invested. Derivatives in particular are high risk, high reward investment instruments and an investor may lose some or all of his/her original investment. If you make an investment in securities that are denominated in a currency other than that of US dollars you are warned that changes in rates of foreign exchange may have an adverse effect on the value, price or income of the investment. The investments referred to herein may not be suitable investments for all persons accessing these pages. You should carefully consider whether all or any of these are suitable investments for you and if in any doubt consult an independent adviser. This report is prepared solely for the information of clients of Chartcraft who are expected to make their own investment decisions without reliance on this report. Neither Chartcraft nor any officer of Chartcraft accepts any liability whatsoever for any direct and consequential loss arising from use of this report or its contents.  

US Sentiment holds the key
The Advisors Sentiment Survey continues to provide advance warning of major market turning points.  
The analysis and data regularly feature in the international financial press as a key indicator of market reversion.
Examples of these articles can be found on Barrons, NY Times, and Investor's Business Daily.
Read what CNBC said about the biggest switch in sentiment for 7 years.
Want to know more?  Click here  - and you can subscribe for just $335 annually.

Historic Advisors’ Sentiment data since 1963 is also available; please contact us for further details.

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