The Sell Signal Continues

January 30th, 2016

January 30, 2016

Was it Confucius who said ” one picture is worth 1000 words ” ?

 If he were alive today and had $1 million invested in the stock market ( SPY ),  Confucius  would say the ( chart ) of SPY  for December 31, 2015 was a picture worth more than 1000 words because it was telling you how not to lose $ 49,786. by getting out of the market as soon as it opened on Monday, January 4, 2016.

The WHAT  TO DO action was all there December 31….   SPY ( S&P 500 ),  closed at $ 203.87 which was at  a price lower than that presented by it’s 200 day moving average trend line ( $204.04 ).  No examination of fundamentals ( WHYS ) could have told you that January 4 was the day for action.  

All the WHYS are good for is for going through the ashes as losses mount starting  the day after the WHAT TO DO day.

The current  SELL signal is good till the close February 29,  because yesterday  (the final trading day of January 2016 ) the market again closed below its 200 day moving average $193.72 …..$202.79 for the second straight month

While a chart ( picture ) is all I need to decide on WHAT TO DO AND WHEN TO DO IT,  there is additional information in the picture which reinforces the situation…

SPY’s 50 day moving average ( $200.31 ) is below its 200 day moving average trend line  ( $202.79 ) and its 20 day moving average ( $192.26 ). is below its 50 day moving average trend line .  That spells out NEGATIVE TREND to a trend follower.   I am almost certain Confucius didn’t say ” let the trend be your friend until the end ” but I’ll bet he would wish he had !

Additionally, a chart plotting the trend line of “On Balance Volume ” is spelling out distribution volume not accumulation volume.

So much for WHAT TO DO.    ( I’m not considering  yesterday’s 2.44% surge in SPY on 50% higher volume anything more than proof that the devil can also be found in the stock market and is creating mischief to lure me away from my trading model. )

As for the WHYS….As I predicted in my previous post, the FED is laying the groundwork for backing off on the March interest rate hike and using face saving language to…..save its face.

How stupid is it to be raising interest rates while Japan and other   central banks are lowering interest rates to below zero ! ?

If you were A  Tokyo resident,  would you rather pay your bank interest to keep your money on deposit with it , or would you buy dollars and move your money here?  Worldwide buying of dollars to invest in the USA  strengthens the dollar  against other currencies and, importantly,  against commodities such as oil which is being used as collateral to finance a lot of debt including that of sovereign hedge funds !  

As the price of oil drops there are margin calls going out for more funds to secure existing under water positions.  In turn, the debtors liquidate profitable positions ( including USA stock market positions and USA real estate ) to meet the margin calls or to offset losses.

It seems there is a worldwide ” stealth liquidation ” of USA assets  in progress.  This means there is almost no place to hide for USA investors and that all bets are off until Fed policy softens , oil prices stabilize etc.

So, I’m riding it out with  the emphasis on ” Out ” …as in out of the market since December 31…

Or,  as in ” a bird in hand ( cash )  is worth two birds  in the bush ( stock market position ) “

Richard Maurice Gore.

 

 

 

 

Game On !

January 16th, 2016

January 16, 2016

 

BUY and HOLD versus TREND TRADING.…….2016 Season

SPY ( ETF basket of S&P 500 stocks ) close December 31, 2015 at $203.87….Sell Signal….GET OUT OF THE WATER….NOW!

On a $1,000,000 investment BUY and HOLD unrealized loss year as of January 15……  7.86% ….$78,667.

On $1,000,000 pulled from market at the next market opening ( January 4 )…actual loss equals 1.65%………$.16,500.

BUT, this isn’t necessarily how the results will look on December 31, 2016.

I follow the dictates of the SPY 200 day moving average,  mechanical model which generated the December 31, 2015 sell signal.

Acting on WHY ( Should )is for theoreticians because the market rarely does WHAT it should do WHEN theoreticians make their WHY   pronouncements.  Trend traders follow the  dictates of their trading model which is primarily  based on the back tested accuracy of  mechanical commands,…. disregarding emotion, and  fundamentals.

In this case, the trading model said NOW even though the pundits have been issuing starker and starker warnings about the age of the bull, China, the price of oil, the future of interest rates and the strength of the dollar.  The trend traders NOW was  when the price of SPY ended the month below  its 200 day moving average .  That was the moment  of reckoning.  The next day is reserved for discussing  all the WHYs.

On January 16, today,  I am sifting through the WHYs and have concluded the most important WHY is the catalyst pronouncement of Janet Yellen that the FED would raise interest rates up  to four times  during 2016.   This pronouncement constitutes a massive injection of uncertainty in the minds of businessmen…sufficient to alter expansion plans  and cause tentative earning forecasts.

Now, I picture Ms Yellen pacing and wringing her hands on how to announce the postponement of all future rate increases until the USA economy is on much firmer ground.  But, its too late ! Ms. Yellen has already been selected, ( by me ),  as Black Swan of 2015 !

 

Richard Maurice Gore

 

December 31 SELL Signal

January 1st, 2016

January 1, 2016

Thought you’d make some money when SPY was ahead 10% by mid May ? ….. Play till May ? 

Those hopes were finally dashed at 4PM yesterday as SPY slid beneath both break even and its 200 day moving average…

SPY opened 2015 at $206.33 per share  and closed 2015 yesterday at $203.87….a loss of 1.2%  (excluding the 2 % paid out in quarterly dividends during 2015 )  Net,Net a gain of 0.8% ( $8,000 )  on an investment of $1 million !  And that ignores 2015 inflation which would take a further bite of about $6,300.  Net, Net, Net for the year …$1,700 profit  on $1 million invested  !!!

This should make you feel better if you don’t have anywhere near $1 million to invest.  

On top of this, SPY generated a SELL by ending December below its 200 day moving average of $204.04.

The SPY 200 day month end / 200 day moving average model is signaling to….

GET OUT OF THE WATER…….NOW!!….

…Except for those positions so near and dear to your heart that you are willing to hold them through thick and thin ! 

Counter balancing the dictates of the 200  day month end  SPY model is the advice of Warren Buffett ( Berkshire Hathaway ) and John Bogle ( Vanguard ) who say you will beat the results of  about 90% of investment pros if you just stick with a passive index ETF such as SPY…Buy and Hold.  And, don’t forget Cramer who implores you to invest in index funds such as SPY if you don’t have the time or inclination to do the work required for investment in sector funds and/ or  individual equities.

I like the SPY 200 day model because it tells me when to be in or out of the market….not necessarily invested in SPY, because I am doing the work required to invest in sector ETFs,  individual equities and options on Index ETFs.  

At least for this year, I ( as an amatuer ) am in the exulted company of the 10% or  so of those investment pros who beat SPY, because I ended the year up 7.6% on funds actually invested, excluding dividends,  and up 4.23% on total funds available for investment, again, excluding dividends .  I’ve asked myself whether I could duplicate this result for others and the answer is no  way.

I barely have the time to invest for the two relatives who have authorized me to trade for them and these cases I only trade the SPY  model and one or two sector ETFs.  I could tell others what I am doing in general terms and show them how I use options, but I don’t have time to hold hands on an ongoing basis, act as an advisor, trade or take deposits.  I don’t have a licence to give advice and I believe I am required to tell you to disregard anything I say which could be construed as advice.

But, I can tell you this.  If you strip everything away and I didn’t have the time to research and act on sectors, individual equities and options for myself, I would most certainly focus on the SPY 200 day model to the exclusion of everything else.  I’d instruct others how  to use the 200 day model if I were unable to even think about investments or…..if I were to set up a trust for my estate or for a beneficiary I would instruct the administrator  to buy and hold  75% SPY ( big caps ) , and 25% IWM ( Russell 2000 smallest of small caps )….following Bogle and Buffet and Cramer exclusively  into passive indexes.

Richard Maurice Gore

The Fed Grabs the Stage

December 18th, 2015

December 18, 2015

Finally, after nine years without a raise in interest rates, the Federal Reserve has raised interest rates 0.25%.

BUT EVEN MORE IMPORTANT,  Fed Chair, Janet Yellen has announced that the need for further rate increases will be reviewed monthly during 2016…indicating that there will be an uncertainty period for a week before the Fed meeting each month.  Not good for the markets…this constitutes a  psychological head wind.  Maybe Ms. Yellen just wants to show us who is boss.  Could be a very expensive ego trip.

” What isn’t necessary to change is necessary not to change”. Low inflation,  Low oil prices.  No help from the housing market to reinforce the wealth effect for consumers.  Where is the confidence going to come from if the Fed is beginning to apply the brakes….from people who are holding down two jobs ?.  Bad for export jobs  as dollar will be stronger and exports more non competitive.  Bad for income statements of multinationals as 2016 foreign earnings will not translate well on year to year comparisons .

So why the increase ? because Ms Yellen, after endless hinting , felt obliged to come through with higher rates without anywhere near a compelling reason.

Dr. Martin Zweig, ” Winning on Wall Street” preached that stocks will probably climb in an environment where interest rates are declining and stock prices will probably decline in an environment  where interest rates are increasing.  His mantra was ” Don’t fight the Fed “. He was a part time professor of finance at Iona College, New Rochelle, NY ( my alma mater ) and just happened to own ( while he was alive ) the most expensive apartment in NYC, occupying  the top two floors of the Hotel Pierre, 5th avenue.  He obviously followed his own advice.

I can’t give advice…but I can tell you that while I am still invested following the SPY 200 day month end model, I have been lightening up this week out of respect to Fed Chairman Yellen who (and maybe I’m just imagining it ) is beginning to look more and more like a grey haired Black Swan.

 

Richard Maurice Gore

SPY Buy Signal Continues

December 1st, 2015

Market close November 30, 2015

The SPY trend following signal ” BUY ” remains  in effect.

This is based on SPY’s November 30, 2015 closing price being above its 200 day simple moving average.

SPY became a buy October 31 and since then has appreciated..o.37%.. The trade is 20 days old.

SPY is an ETF ( Exchange Traded Fund ).  It represents a basket of the USA’s top 500 companies weighted by the amount of capital invested in a particular stock.  Take the price of a stock and multiply it by the amount of shares outstanding to arrive at total capital.

SPY’s top holding, Apple, represents 3.64% of it’s assets,  while SPY stock #25  of the 500 ( VISA ) represents 0.84% of the value of SPY’s portfolio… and so on, down to holding #500.  Pretty good diversification, for all intents eliminating the risks inherent in investing in one stock.

The remaining risk in SPY, market risk, ( all the boats go out with the tide ) is still there, but my intent is to eliminate that risk by my market trend following ( timing ) activity. Of course, Warren Buffett,  and John Bogle ,( Vanguard ) want you to just buy and never sell SPY, but my back testing  has put me in  the cheeky position of disregarding their advice.

If you want even more diversification, consider Vanguard’s VTI which represents 3,791 USA holdings ( the entire stock market ) in its basket.

I prefer to focus on SPY because SPY is more liquid than VTI and  I also use 50 % of my capital to contingently buy SPY one month out at a price lower than today’s price .For this I receive an upfront premium.  In other words, I’m not afraid to lock myself in to purchasing even more SPY at what I consider to be a better price.

Richard Maurice Gore

 

 

BUY SIGNAL !

October 31st, 2015

OCTOBER 30, 2015 ….Market Close

SPY ended October at $207.93 which is 1.6%….. above it’s 200 day simple moving average of $$204.59.

According to my SPY 200 day Month End  Model, a buy signal has been triggered telling me to go ” ALL IN “. in SPY.

The last Buy Signal for SPY under this model was valid for 921 days ( December 30, 2011 – August 31, 2015 ) and returned a total of 69.02% including dividends and distributions.

There have only been 6 trades since the Buy Signal of February 29, 2000.  All Buys were winners except the Buy Signal triggered on March 28,2002 which became a Sell Signal just one month later, resulting in a loss of 5.82% for the round trip.

If you had followed this model since January 2000,  your total return would have been 280.02% versus 103.29% ( Buy and Hold ).

If you had ignored the month end rule  and bought and sold SPY every day SPY  crossed its 200 day moving average, you would have been involved in 61 trades and 46 of them would have been losers. !!

I subscribe to a back testing service,” ETF Replay” , and I am relying on the accuracy of  their data for my trading.

Please don’t rely on my advice because I have no licence to give it.  I am merely showing you what I do as an alternative to the Buy and Hold advice given by  ” heavyweights ”  such as  Warren Buffet and John Bogle of Vanguard.  I am using the same index, the S&P 500, but adding the concept of mechanical trend following.

As stated in my very first Post…all this is intended to do is share with those who are new to IRAs and ETFs,  my  alternative to my  putting myself in the hands of someone who could expose my savings to the higher risk of individual stocks without indicating the difference in magnitude between the “specific risk”  of individual stocks and SPY’s  much lower “market risk”.

 

Richard Maurice Gore

 

 

Citizen Alert ! Follow the Money !

October 9th, 2015

October 9, 2015

You may be interested to know PEOPLE magazine has just published a contact list for all 535 members of the US Congress.

PEOPLE published the list as  ” a Call to Action ” for people to make their voices heard about the frequency of mass shootings in the USA.

Congressional contact data has been  in the desk drawer of every Lobbyist on K Street,  Washington DC. for some time.

Lobbyists  are using the list to contact your Congressman and infiltrate his staff  to  influence him to vote on  many issues  for what is very  probably not  in your best interest.

Since the year 2000 the number of  lobbyists in Washington has doubled and the starting salary runs about $300,000.  You can thank ” trickle down ”  ( Bush Tax Cuts for the wealthiest Americans ) as ammunition for the lobbyists to ” work with ” your Congressman.

An Example of Lobbyist influence…. 90% of Americans are for a background check on gun purchasers  and Congress does nothing. What is going on here ?  Total non-responsiveness !

The truth is congressional staffs have been thoroughly infiltrated and corrupted by lobbyists with gifts, trips, freebees and promises of future employment. This has made Congress non-responsive and incapable of courageous positive action.  Campaign money flowing from lobbyists and their wealthy overseers has made it more  and more possible for congressmen to ignore answering  to their constituents for their actions or lack thereof. How many congressmen fail  to get re-elected ?

Our founding fathers didn’t want congress to be a career…never mind a business.! Do you think Congress would vote for term limits ? Not a chance.

Did you know that more than half of our 535 members of Congress are millionaires ?  Wouldn’t it be interesting to know whether they became millionaires after becoming a member of Congress ?

In my opinion The ultimate election issue of 2016 is….

Can we free Congress from the clutches of the lobbyists and the 1% wealthiest Americans who have doubled down on Congress with ” trickle down “……..because this issue plays into every issue on the election agenda.

This might be a good test to measure Lobbyist infiltration of Congress….

How many of the 535 members of Congress accept campaign money or other donations from the National Rifle Association.? Who are they.?  

The only way to end this subversion is to offset the focused  gifts and threats of the lobbyists with the threat of focused grass roots action aimed at the  election defeat for individual  Congressmen who ” sell out ” to the lobbyists and their ultra rich overseers..

It will require a grass roots MOVEMENT to do this ..as suggested by Bernie Sanders because Congress refuses to cure itself..

Bernie or no Bernie Sanders Congressional REFORM must take place ASAP.  Attitudes are hardening and our economy is evolving into what could become a struggle exponentially beyond ” Occupy Wall Street .”…especially with the wealthiest 1% saying the bottom 99% is just jealous of their success.

Richard Maurice Gore

 

 

August 31 Sell Signal Still Good

September 30th, 2015

September 30. 2015

Don’t mess with this SPY timing model.

It signaled  “SELL ” as of the close August 31.

As of the close today, September 30, 2015,  the 200 day moving average of SPY was $204.43. The closing price of SPY was $.191.59,  6.28 % below $204.43  By definition a sell signal.

Are you surprised ?

Take a  look at some background factors.

1- You have Federal Reserve Officials including Janet Yellen publicly vacillating on a decision to raise rates  a miserable quarter percent ( 25 basis points ) even though they know a rate hike is not warranted by an overheating economy and could throw us into a recession. A rate hike and the resultant stronger dollar would help our Euro friends revive their economies via exports to us…at the expense of  exports  by our major international companies.  And that prospect is a ” no sale ” on Wall Street !

2- More and more China is looking like a fragile economy, with a decline in China’s stock market and economic indicators signaling weak buying power. Are you listening  Apple ?  Haven’t heard Carl Ichaan talking about a $200 Apple recently.

3- You have all the maneuverings of Putin and Obama relative to Syria including the threat ( made good ) of Russia directly attacking our Sunni  “friends” ?  . So it looks like Russia is lining up the Shites of Syria and Iran against the Sunnis of Saudi Arabia, Jordan, Iraq etc. for a replay of the Iraq / Iran war on a Syrian playing field ( for  starters ) with Putin creating problems that will take our focus off the Ukraine and get revenge for the sanctions.

4- You have a mass of humanity migrating toward Germany and threatening to change the multi national culture of Europe.  Who is hidden in that Trojan horse ?

5 – You have all the Republican players calling each other ( and Obama ) out on how terrible things are.  And, you have Bernie demanding wholesale systemic reform of our political and financial institutions…because our economy is rigged in favor of the 1% ultra rich.

Does this add up to a ” Wall of Worry ” that markets can climb ?  ( even with interest rates as low as ours )….Or is this a “Wall of Uncertainty” that equity markets abhor with a cascading  selloff continuing ?

You be the judge…I don’t have an answer I’m willing to  underwrite with real money. I’m a trend follower….I’ll ride with the SPY 200 day moving average / month end model and wait for a break to the upside before I dive in.  According to Bill Gross ex-guru of PIMCO….no kind of instrument is worth investing in versus the safety of cash at this particular point.

But that doesn’t mean I can’t nibble at ETFs and Stocks which have sold off but which I deem ” worthy ” of investment. Example: chosing worthy pharma stocks and bio ETFs as a reaction to Hillary’s threats and investing in them for their outstanding USA performance and resistance to her  campaign rhetoric.

So who do I like for this type of small investment ( 10 to 15 shares per name ) every time the market sells off another 5% and they remain resistant.

ETFs:  XLV….XBI….IJR….ITA

Equities: ORLY…..ALK….FB….BA…..GILD…..

Won’t be back at you till October 31 unless there is a big market moving  development that deserves analysis  and comment

Richard Maurice Gore

 

 

About Walter Palmer, Trophy Animal Hunter

September 7th, 2015

September 6, 2015

I know this doesn’t relate to investing and that I should be continuing work on my ” watch list ” of  ETF and equity securities during this ” Sell Signal ” intermission, …..but I can’t.

I don’t work for anyone except myself, so if I want to step up and step out for or against an issue, I will.

I’ve been told by parties interested in me that I’m beginning to overdue the blogging, that nobody is really that interested.  OK, I get it.  I’ll take a break and after this Post I’ll be quiet ..until a ” BUY” signal flashes some month end..

Now to the issue at hand.

I have just read that Walter Palmer gave his first interview, post Cecil,  to the London Daily Mail.

He claims he definitely would not have killed Cecil if he knew he was famous.

He claims that there are some safety issues for his family and that he doesn’t understand the level of humanity it would take to have enmity toward people not involved.

I find this amazing and my first thought is how did this guy get through an accredited dental school.  His brain needs a root canal !

OK Palmer, I get it.  Its OK to kill animals as long as they are not famous.  Its OK to pay to have a lion lured out of  his sanctuary, shoot him with a bow and arrow and then enjoy the thrill and prolonged anticipation of a 40 hour hunt following the blood trail…finally dispatch him, and then cut off his head with which you will pose triumphantly flashing a smile and your white, white teeth. 

I get it.  If its not a famous animal and you have the permits , its all OK!  That’s what you think ?

And about the safety issues for Palmer’s family…  Did you realize that you were condemning Cecil’s cubs to death when you took away  their protector ? Two are dead already…Thanks to you !  That’s OK ?  You probably have nothing to worry about concerning the safety of  your family but you sure as hell do deserve to worry !

Palmer, what I don’t get is why you can’t be satisfied just hunting with a camera and bringing home the beauty and majesty of Africa.  What more is there for you out there that isn’t grounded in a sick brain.

Lots of Americans, including me, have been through the Parks, including Kruger with cameras and we had a great time soaking up the atmosphere of ” the bush” and the encampments .  You have given new meaning to the term ” Ugly American ” and your neighbors in Bloomington, Minnesota should shun you as a pariah for your insensitivity to living creatures.

You’ve brought a shame to your name and on your family that won’t begin to be  be washed away until you,  yes you! ,  perform ongoing service, and I don’t mean money, to put a stop to trophy hunting.

Close your practice and go back to Africa. Work for free in a dental clinic for the local tribes and work to raise orphaned animal cubs.

That is your path to redemption.

Unless you do that, we all will know your only regret is that you were caught .

Richard Maurice Gore

 

 

Safe but Anxious !

September 3rd, 2015

September 3, 2015

I keep telling myself I have been through this before, and that I should be feeling very good about having taken so much money off the table after August 17, and before the SELL signal of August 31.

But, I don’t feel very good.  Although I am disinclined to do any day trading, I feel as though I should be doing more strategically to deal with future moves the market makes. I don’t know whether this means only that I  hate  being passive,  or possibly, that I’m beginning to exhibit the symptoms of a degenerate gambler.  I’ll assume the former applies to me, ( until the intervention ).

To rid myself of market anxiety , I’ve decided to do something proactive and positive to while away the time until the next month end BUY signal arrives, ( hopefully October 31 ).  

I would feel very anxious if a BUY signal is received September 30. With October, Halloween  and the prospect of a 100% whipsaw staring me in the face,  I’ve already decided I would absolutely mistrust a September 30 BUY signal.  How’s that for taking the emotion out of investing !

To alleviate my feeling of dread, (even though I have very little at risk ), I’ve decided to invest dribs and drabs every time the prices of a particular equity or ETF  hits a new low, 5% lower than it’s last low. This means if an equity declines a full 50%,  I’d have made 10 drib /drab investments to commemorate every successive  5% downward move in that equity or ETF . With a 25% retracement, I’d have made 5 purchases , and with a 15% decline, just three purchases in an equity or ETF . All this presumably would lower my average cost as the market moves lower with roughly 85% of my money waiting for an ” All In”  deployment at the BUY signal.

I have a strong sense that this activity will, at least , make me feel I am doing something constructive while I wait..

I will add between 10 and 25  shares every time the market price of each of the following ETFs declines a further  5%.

SPY, XBI, QQQ, XHS, VDE, VGK, HEDJ, DXJ.

I will add 25 shares every time the market price of each of the following equities declines a further  8%.

AAPL, CVS, HD, ALK, MHK, WBA, ORLY, HCA, FB, GILD, TWX, SWHC.  I know its said to be foolish to average down a losing equity position.  But, these are equities which exhibit all the characteristics of marriage type equities.  I will still be following specific events and can pull the plug on any  if I believe doing so is warranted.

Now for my disclaimer.  I don’t have a licence to give investment advice to anyone(  including myself  ! ) ,  so please don’t consider the above in any way reliable for investment action by you.  The purpose of the this site if for me to find out where and why you think I’m wrong.  So, please feel free to  chime in.

Richard Maurice Gore