The Sabrient Blog

Welcome to Sabrient’s first publication of Rock Solid Yields (RSY) portfolio. We believe you will find it worth your time.

A note about RSY: Rock Solid Yields Portfolio {RSY} generates cash flow from stable high paying dividend stocks derived from creating a value portfolio based on Sabrient’s proven track record of picking stocks that will outperform the market. We start our search for stable high paying dividend stocks by using a modified MyStockFinder search tool called “Rock Solid Yields” and then pick only the best ones based on a variety of qualitative factors including but not limited to the following list: a) Insider Buying/Institutional Buying, b) Earnings and estimated earnings per share, c) Revenue and Cash Flow, d) Analyst Research and e) noting any flags and the overall score from a forensic accounting analysis. We pick strong-buy Sabrient rated stocks as well as buy. Since we are picking more value oriented stocks, we are not looking for the next stock with meteoric rise in price but a more steady and consistent growth pattern. Dividends give us the icing on the cake and provides a base of income for down markets. From our track record and analysis of available stocks that provide good dividend yields, we will target overall dividend yield of around 5% and growth of assets of around 10% per year. This of course will vary based on market conditions at any given time.

The above table shows a collection of stocks that rank high on our MyStockFinder stock search tool with a modified RSY search criteria. We could just pick the top 10 stocks and go with them for some above market performance, but a closer look at these choices reveals that certain stocks do not give us the confidence of long term growth and dividend cash flow which we hope to achieve with this portfolio. So let us go through them now and see if any should be eliminated from investing in.
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Market volatility continues, with the Dow gapping down under 10,000 to start the day today before recovering nicely by the close. Most of the major indexes are still below their 200-day moving averages, but interestingly, the Nasdaq 100 (QQQQ) and the Russell 2000 (IWM) actually closed above theirs. I see this as bullish.

Yet despite the unstable markets, Sabrient’s quantitative SectorCast-ETF rankings were impacted very little in this week’s rankings. With no technical factors in the model, the weekly rankings tend to be pretty stable. In mid-January, the sector rankings took a decidedly conservative turn with Healthcare, Utilities, and Consumer Staples at the top, and indeed we saw a market correction follow. Lately however, the model has continued to reflect optimistic projections and analyst sentiment, which has led the more economically sensitive sectors to remain relatively strong in the rankings throughout the latest market weakness.

And this week shows virtually no change once again. As I cautioned last week, this doesn’t preclude a near-term pullback in the markets, and we have certainly gotten that. But the model continues to tell us that overall valuations and analyst projections are displaying optimism for the economy and the markets. Read more…

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The stock market’s technical “topping formation” finally manifested in a correction in early May, and it resumed over the past several days. The 20-day moving average that had provided consistent support during the methodical rally has proven to be formidable resistance (along with the converging 50-day).

Last week, Sabrient’s quantitative SectorCast-ETF rankings were impacted very little by all of the market turmoil. With no technical factors in the mix, perhaps that’s no surprise. However, often the sentiment reflected by the technicals will show up in analyst downgrades or changes in relative valuations – but that didn’t happen.

And this week shows virtually no change. The model employs a fundamentals-based multi-factor approach including forward valuation, earnings growth prospects, recent analyst consensus sentiment, and various return ratios. Energy and Materials have strengthened a bit more, but otherwise the model is still reflecting a slightly bullish outlook, with the more economically sensitive sectors displaying relatively higher scores.

This doesn’t preclude a near-term pullback in the markets. But the model is telling us that overall valuations and analyst projections are showing some optimism for the economy and the markets. Read more…

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Last week I warned that after several attempts to pullback hard, the market’s topping formation seemed to be kicking in. Indeed it did. After finding strong support around the 20-day moving average on those previous tests during April, last week investors fled rather than bid and the market actually bounced off its 200-day moving average during Friday’s session.

But Sabrient’s quantitative SectorCast-ETF rankings were impacted very little. The most obvious change is some relative strengthening in Energy. The model employs a fundamentals-based multi-factor approach including forward valuation, earnings growth prospects, recent analyst consensus sentiment, and various return ratios. Overall, the model still looks mostly bullish, with the more economically-sensitive sectors tending toward the top.

Latest rankings: The rankings are based on Friday’s close, so they don’t reflect Monday’s strong bounce from Friday’s abyss. But you can see that Energy (XLE) has jumped back into the top two this week. It saw strengthening in the number of analysts increasing earnings estimates, and it remains at the top in projected price/earnings ratio and near the top in projected year-over-year change in earnings. Read more…

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Four times over the past month, the stock market has threatened to pullback strongly after such a long and impressive upward march. The first three times (April 16, 27, and 30), it found a strong bid around the 20-day moving average to make each a one-day event, which investors treated as entry points into a continued bull market. However, some technicians have been warning of a topping formation – because market tops are rarely a sudden event but rather a process. This finally might be the real thing.

Sabrient’s quantitative SectorCast-ETF model employs a fundamentals-based multi-factor approach including forward valuation, earnings growth prospects, recent analyst consensus sentiment, and various return ratios. Overall, the model still looks mostly bullish – despite the aforementioned topping formation at hand.

If I’m reading the SectorCast model correctly, all the ducks are lining up for this pullback to be a buying opportunity. The economically-sensitive sectors are strengthening relative to the defensive ones. However, the one possible fly-in-the-ointment is Consumer Discretionary, which has fallen in the rankings. But this might be because it has been the strongest performing sector over the past month, and the other economically-sensitive sectors are merely trying to catch up. Read more…

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As earnings season gets underway with mixed results but a generally positive trend, Wall Street analysts are coming out with upgrades and downgrades to earnings estimates that are significantly impacting our sector rankings this week.

Sabrient’s quantitative SectorCast-ETF model employs a fundamentals-based multi-factor approach including forward valuation, earnings growth prospects, recent analyst consensus sentiment, and various return ratios. Overall, the model still looks mostly bullish – despite the apparent ongoing uncertainty indicated by the tight relative scoring across the sectors, and despite today’s sell-off. On the one hand, Financials and InfoTech have strengthened, which is bullish, but on the other hand Consumer Discretionary and Industrials have weakened somewhat. Read more…

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After flirting with a pullback in the wake of the Goldman Sachs news, the stock market instead decided to abruptly reverse its slide mid-day on Monday and resume its impressive advance in what many observers are calling a “junk rally” due to strength in the more speculative names. Nevertheless, the risk of at least a mild correction is sufficiently great to suggest that either a portfolio hedge or an absolute return approach is particularly warranted at this point.

Sabrient’s fundamentals-based quantitative SectorCast-ETF model shows some changes in the relative rankings among the ten S&P 500 sectors. Overall, however, the model appears to be mostly bullish – despite the apparent ongoing uncertainty indicated by the tight relative scoring across the sectors.

Energy and Financials are showing renewed strength on a forward-looking basis, while Information Technology and Consumer Discretionary are not far behind, and Industrials is showing noticeable improvement in analyst optimism. Read more…

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The market twice threatened to pullback over the past week, but each time it resumed its methodical upward trajectory. The S&P 500 set a new intra-day 52-week high on Monday, and then set another 52-week closing high on Tuesday. Sabrient’s SectorCast-ETF model shows little change from last week, with Healthcare on top, again followed by InfoTech and Consumer Discretionary.

This value-oriented, fundamentals-based model employs both historical and forward-looking value and growth metrics as well as factors related to Wall Street analyst consensus sentiment. It has proven effective for relative rankings among ETFs, as well as sector rotation, enhanced ETF, and sector-specific long/short portfolios. 

As many market players prepare their portfolios for the possibility of a sudden and sharp pullback on the horizon, many technicians and chartists see nothing but clear skies ahead. For its part, the SectorCast-ETF model continues to reflect mixed signals among Wall Street analysts, as economically sensitive sectors like InfoTech and Consumer Discretionary score highly while the spread in the scores between the top and bottom ranked sectors remains historically tight. Read more…

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After a brief consolidation period and staying flat for two weeks, the market has resumed its upward march, with the S&P 500 setting new 52-week highs each day. Healthcare now tops the forward-looking rankings, followed by InfoTech and Consumer Discretionary, both of which continue their impressive climb.

Also notable is that higher quality stocks have come back into favor, after playing second fiddle to the more speculative stocks during March. This has allowed Sabrient’s quality-oriented SectorCast-ETF model to shine once again.

The model continues to flash conflicting signals, however. It is indicating uncertainty among Wall Street analysts on the one hand, as well as continued improvement in the rankings among some of the more economically-sensitive sectors on the other hand. Overall, a cautious optimism for continued recovery appears to be indicated. Read more…

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After threatening to pullback in the face of overbought technical conditions and low VIX, not to mention the ongoing uncertainty regarding global economic recovery, the market instead went flat for the past two weeks as it continues to be supported by an underlying bid. With improving consumer spending and consumer sentiment metrics, the S&P 500 now has its sights set on 1180 as the next target. Nevertheless, depleted levels of cash among mutual funds and nervous traders ready to protect profits will continue to be a challenge.

Sabrient’s value-oriented and fundamentals-based SectorCast-ETF model is showing conflicting signals, reflecting uncertainty among Wall Street analysts on the one hand, as well as improving relative rankings among some of the more economically-sensitive sectors on the other hand. Read more…

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