how to protect your portfolio in a bear market by john schlitz
TRANSCRIPT
How To Protect Your Portfolio In A Bear Market
John SchlitzChief Market Strategist
Chaikin Analytics
© 2013 Chaikin Analytics All Rights Reserved. Proprietary and Confidential.
March 30, 2015
What We’ll Cover
• Exploring the Chaikin Method
• Using Chaikin indicators to identify trouble spots
• Qualifying and/or anticipating breakouts/breakdowns
• Using divergences to identify tops/bottoms
3© 2013 Chaikin Analytics All Rights Reserved. Proprietary and Confidential.
How Chaikin Analytics Helps You Improve Your Results
• Fundamentals
• Technicals
The Key to Surviving a Bear Market Is Playing Good Defense, which means constantly monitoring…..
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How Do You Cut Through The Clutter?
With The Chaikin Power Gauge
Chaikin Power Gauge RatingClear summary of a stock’s potential - with a record of success
© 2014 Chaikin Analytics All Rights Reserved. Proprietary and Confidential.
Technicals• Price Trend • Price Trend Rate of Change• Chaikin Money Flow • Relative Strength vs. Market• Volume Trend
Experts • Earnings Estimate Trend • Short Interest • Insider Activity • Analyst Ratings• Industry Relative Strength
Financials • LT Debt to Equity Ratio• Price to Book Value• Return on Equity• Price to Sales Ratio• Free Cash Flow
Earnings • Earnings Growth• Earnings Surprise• Earnings Trend• Projected P/E Ratio• Earnings Consistency
Why are those 20 factors so important?
• Each one was back-tested for efficacy.
• Combined, they gauge a stock’s 1-6 month potential.
• Bullish PGR stocks significantly outperform.
• Bearish PGR stocks significantly underperform.
The Chaikin Analytics Method
Chaikin Buy/Sell Signals
Technical IndicatorsChaikin Money Flow & Chaikin Relative Strength
Chaikin Power Gauge
Money-Flow and Relative Strength
10
• Power Gauge Rating Bullish
• Relative Performance Strong
• Chaikin Money Flow Strong
What to Buy: Classic Bull
Market agrees with the ModelMarket agrees with the Model
CMF stays positive
CMF stays positive
AAPL - Classic Cup & Handle Breakout with confirming Chaikin Credentials
AAPL: Weekly- 5 Years
Playing Good DefenseWhat to Sell and Avoid
• Power Gauge Rating Bearish
• Relative Performance Weak
• Chaikin Money Flow Weak
What to Sell: Classic Bear
Negative Chaikin Credentials
Bearish Personality ChangeBearish Personality Change
CMF stays negative
Negative Chaikin Credentials + Earnings (1)
Negative Chaikin Credentials + Earnings (2)
H&S top, with negative credentials in the right shoulder
Long-Term Chart Offers A Unique Perspective
RIG – 1 Year
Early warning - trapped in lower portion of the rangefor an extended period.
When Short-Term Meets Long-Term
Strong Chaikin Credentials + Confirmed Breakout = Strength
Early Warning = “Avoid”, Confirmed Breakdown = “Sell”
Strong Credentials + Confirmed Breakout = “Buy”
Sector and Group Analysis
•Ranking sector/sub-sector ETFs via the Power Bar
•Evaluating ETF trend violations/pattern breakdowns
•Identifying strong/weak stocks within an ETF
•Spotting underlying weakness in rising/neutral ETF price action
Ranking Sectors via the Chaikin Power Bars
Ranking Sub-sectors via the Chaikin Power Bars
Viewing ETF component stocks
Spotting underlying weakness in rising/neutral ETFs
Remember to always check the long-term chart
Combining Chaikin Analytics With Basic Technical Analysis
• Use Chaikin Analytics to:
• Assess the current trend• Confirm trend changes• Evaluate breakouts/breakdowns• Identify divergences before price reacts• Spot “stealth” accumulation and distribution
Evaluate Current Trend
Big Base = Big Move
Using Personality Changes To Confirm Price Trend Changes
Using Chaikin Credentials To Evaluate Technical Patterns (1)
Using Chaikin Credentials To Evaluate Technical Patterns (2)
Using Chaikin Credentials To Evaluate Technical Patterns (3)
BA - Two confirmed breakouts with early positive turn in PGR
Using Chaikin Credentials To Evaluate Technical Patterns (4)
Institutions fly under the radar(“stealth” buying and selling)
Stealth Distribution (1)
Stealth Distribution (2)
Stealth Accumulation
Chaikin Signals Assist With Timing
Relative Strength Buy Signal
• Stock is outperforming the market• Turning up from an oversold condition• Crosses above its short-term (21-day) MA
HNT with Relative Strength Buy Signals
Relative Strength Sell Signal
Rules For Weathering A Market Decline
• Monitor your portfolio regularly. (Bear markets don’t announce themselves).
• Avoid stocks with negative Relative Strength and/or Bearish Power Gauge Ratings.
• Respect divergences between price and the Chaikin Credentials.• Check Industry Group Strength (using the Power Bars) as well as the
stock in question.• Don’t chase internally weak rebounds in Bearish PGR stocks,
especially when Relative Strength is negative.• Know where major support, resistance and trendlines reside. • Check for Chaikin Sell signals.
Don’t chase internally weak rebounds (1)
Don’t chase internally weak rebounds (2)
Monitor Long-Term Trends……
…….and intermediate trends (1)
Intermediate Trends (2)
Check the Index and ETF
Avoid Stocks in weak Industry Groups
Do these……..
• Monitor your portfolio regularly. (Bear markets don’t announce themselves).
• Avoid stocks with negative PGR’s and negative relative strength.
• Respect divergences.• Check Industry Group Strength (using the Power Bars).• Know where major support/resistance is. • Check for Chaikin Sell signals.
……and be better prepared for these
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