THE 3s REPORT: ROAR Score Finally Rises From The Depths!

From timely to timeless, the 3 most important points we can make about stocks, bonds, ETFs, markets and investing...updated weekly

ROAR Score weekly update

• Our "Reward Opportunity and Risk" (ROAR) score moved up from 10 to 30, breaking a 9-week streak at that lower mark. That tied a record for the longest length of time at a single level.

• This means a 2-ETF portfolio that can only be allocated to SPY and BIL would now be 30% SPY and 70% BIL.

• In my own live 2-ETF portfolio I have maintained since the start of 2022, I bought some SPY and sold some BIL to adjust from the 10%/90% allocation to the updated 30%/70% position.

3 Quick Thoughts on markets

• No, I do not think we are out of the woods yet. But we may have at least found a stream with clean water to drink, to sustain us for a while. But bears are still roaming.

• Moving on from metaphors to actual market analysis, having the ROAR Score automated (following months of effort) makes for a much more fluid process. I am excited to debut the full-featured ROAR Scores for stocks and ETFs in a format that is quick and easy to use. We are getting closer, but the work is not yet done. However, the toughest part, convincing myself that it is a useful tool, is behind us. I'll be posting much more on it during the month of May, and we hope to start formal beta testing for subscribers and volunteers during that month. If you missed it, here's a link to what is essentially a whitepaper I wrote on the ROAR Score at Barchart.com.

• The market continues to be highly not interesting, which is a good thing. THIS is the point in the market cycle where many investors have seen a big chunk of their portfolio disappear. But for those of us who prioritize ongoing risk management over greed, speculation and hope, and use all the modern tools markets provide us with, this is the proverbial catbird's seat. One move at a time, I aim to avoid big loss ("ABL") then make as much as I possibly can.

3 ETF (or index) charts I’m watching

This week, since the market is so "binary" with stocks en masse moving up and down together, and other asset classes more highly-correlated than usual, I thought I'd chart the good old S&P 500 index ETF (SPY), but across 3 separate time frames. I learn a lot by doing this regularly, so I'd like to share it here.

Here's that bounce and additional upward potential, near-term, in living color. This translates to a ROAR Score of 30, not 10. But does it mean the market decline is over? Not likely. The year 2000 was like this to some degree. The market fell hard in March, calmed down, then September was really the end of the bulls...for 3 more years.

If we are going to see a renewed, sustainable S&P 500 up move, that 20-week moving average is going to have to reverse course. There's been "technical damage" done that will take a month or two to resolve, at a minimum. And even that will simply get things more toward a "neutral" balance of reward and risk. And if the lower part of the chart ("PPO" indicator) fails to recover, look out below.

The very long term view shows a very long term danger. This type of picture has typically been associated with deep market drops. All of this S&P 500 analysis is simply to point out that risk is STILL historically high. And that will likely be the case for at least another 10-15% upward from here, if that indeed occurs.

3 stock charts I’m watching

This stock looks about as optimistic as one can get. And earnings are not announced until June, so that's one less thing to get in the way. I don't follow this one closely, but that chart makes me want to learn more.

I'm not involved with BMY currently, but I will point out that this is the type of chart that says "high risk but high reward potential." This is the type of stock that could make for a nice option collar position at some point: low priced stock so 100 shares is a $5k investment instead of, say $30k if it were at $300 stock price. And if the options are liquid and show good pricing, a collar could be constructed with strong upside and very low downside risk. Will be looking into this one.

I own another stock in this industry, but the charts look similar. Early stages of what could be a steady comeback. This is in the REIT sector, but these cell tower stocks tend not to yield as much as other REIT sub-sectors.

Final thoughts for now

I have not mentioned the bond market much, but if the trend I see percolating continues, I will certainly be devoting more space to it soon. I see a slow but persistent path in the charts toward much lower rates, if the next hurdle area for bond prices is breached. My suspicion is this could be a late May or June story. Stay tuned!