We are extremely proud to start 2015 with what many investors would consider a remarkable return. In the four weeks* we made a 7.2%* compared to the FTSE 100’s 3.7%. This means we outperformed our UK benchmark by 3.4%.
* Performance data taken 28th January 2015.
ISACO investment performance verified by Independent Executives Ltd.
This information is taken from The Big Picture, to download a sample copy please just click here.
Is the market healthy or unhealthy?
The way we use to check if the market is behaving as it should is to look at the trading action (price and volume activity) of institutional investors. Why do we do this? The stock market is about six month forward looking and its daily activity is the consensus conclusion whether institutional investors like or don’t like what they see happening down the road. By watching what the big players are doing (buying or selling) each and every day, it can provide essential clues to which way the market is likely to head.
It’s best to try to get ‘in sync’
Institutional investors control approximately 75% of the market’s future direction, which is why we aim to keep ‘in sync’ with them. If you don’t, it feels like trying to swim against a strong current. When you don’t get in sync, you often get hurt financially and that’s why we like to see if the 800-pound gorilla investors are buying, because when they do, it strengthens the market.
However, if they are selling, it weakens it. The other thing we like to keep a close eye on is the behaviour of leading stocks. If the markets best stocks are acting weaker than the general averages, it’s negative. However when leading stocks are outperforming the market, it’s positive.
Bull market? Bear market? Where are we?
Take a look at this 20-year chart of the NASDAQ Composite and you’ll see that the bull market that began in March 2009 (Point A) is almost six years old and for now remains intact.
Since the uptrend began, the NASDAQ Composite has made a very impressive return of 278.1%**. However, to make that gain it has had to experience three quite challenging corrections. The first (Point B) occurred from April to November 2010. The second (Point C) is a correction that started in May 2011 and ended in January 2012. The third (Point D), began in late March 2012 and finished March 2013. Since then we have had several retracement periods but none of them have been as severe as these three.
** Performance data taken 28th January 2015.
ISACO investment performance verified by Independent Executives Ltd.
NASDAQ trades in a sideways corridor
On Friday the 30th of January we pointed out in the Daily Market Update that the NASDAQ’s was trading in a sideways corridor. As you can see on this chart, since November 28th last year when the NASDAQ made a high of 4811 (Point E), the Composite has been travelling in a price range between 4547 (Point F) and 4815 (Point G).
On that day we also said… ‘We are happy for it (the NASDAQ) to continue to trade in this range because eventually it will have to break out to either the upside or downside. Because we are of the opinion that we are still in a bull market, we believe that the breakout is more likely to be to the upside.’
Is the market starting another leg upwards?
On Thursday 12th February, the NASDAQ broke out (Point H) of a sideways consolidation pattern (Point I) in heavy volume (Point J).
Friday’s 0.75% uptick in heavy trade was a perfect follow up to Thursday’s breakout move and helps to heighten the probability that Thursday’s breakout will be successful. This means the market could now be starting another leg upwards.
This information is taken from The Big Picture, to download a sample copy please just click here.
As always, if you have any questions or thoughts on the points covered in this post, please leave a comment below or connect with us @ISACO_ on Twitter.
About ISACO
ISACO specialises in ISA and SIPP Investment and is the pioneer of ‘Shadow Investment’; a unique service that allows you to look over our shoulder and buy the same funds that we are buying. Together with our clients, we have an estimated £57 million actively invested in ISAs and pensions*. Clients like us because we have a track record of ‘beating’ the FTSE 100**. Over the last 17 years, we’ve outperformed the Footsie by 77.9%. You can find us at www.ISACO.co.uk.
What is Shadow Investment?
Picking the right fund for your ISA and SIPP is not exactly the easiest job in the world. And knowing 'when' to buy and 'when' to exit is even more difficult! Our ‘Shadow Investment’ Service is here to help. Our service allows you to look over our shoulder and buy the same funds that we are buying.
When we are thinking of buying a fund, we alert you so that you have the opportunity to buy it on the same day that we buy it. We also tell you about when we are planning to exit the fund. You control your investment account, not us. You can start small and invest as little or as much money as you like.
By knowing what we are buying, when we are buying and when we are exiting, throughout the year you can mirror our movements and in effect replicate our trades. This means you have the opportunity to benefit from exactly the same investment returns that we get. Our investment aims are 8–10% per year.
We are totally independent, fully transparent and FCA compliant. We’re warm, friendly and highly responsive and it’s a very personal service that gives you direct access to the Sutherland brothers; ISACO’s two founders.
Who are ISACO’s clients?
Clients who benefit most from our service have over £250,000 actively invested and the majority of them are wealthy retirees, business owners, self-employed professionals and corporate executives. We also have clients from the financial services sector, such as IFAs and wealth managers.
Do you have questions?
To have all your questions answered, call 0800 170 7750 or email us at: info@ISACO.co.uk.
* November 15th 2012: Internal estimation of total ISA and pension assets owned by ISACO Investment Team and ISACO premium clients.
** December 31st 1997 - December 31st 2014 ISACO 105.5%, FTSE 100 27.6%. ISACO Investment performance verified by Independent Executives Ltd.
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