SPY – Good News / Bad News

March 30, 2018

The good news is that there was no Sell signal, yesterday March 30,2018.

The bad news is, if you have been faithful to the dictates of the  SPY 200 day, month end, trading model since December 31,  you are down $18,198, year to date on, the 4,905 shares you have been holding.

SPY , December 31, 2017  , $266.86

SPY , March 30,2018,   $263.15………difference ..( $18,197.55 ) negative

With only 1/3 the above investment, I am ahead $14,969, year to date,  the reason being I don’t invest in SPY ( market risk ), I use SPY only as the canary to tell me whether its ok for me to be in equities ( market risk plus specific risk ) or be on the sidelines. If I didn’t have the financial background or analysis time to invest in Equities, I too would be following the SPY 200 day model and$18,197.55 unrealized loss would not have me worried.

Truth be told, I was ahead $33,000 in equity profits just two weeks ago. Equity Profits can melt fast in a downdraft.

Now, SPY notwithstanding, I am investing only 10% of my investible funds.  I could have been ahead $100,000 if I had all my investible funds invested in equities as of January 1. So I am ahead $80,000 less than what would have been had I followed my convictions 100%. No tears.

From the above, you can conclude that the specific risk of equity investing  ( as opposed to just the market risk of SPY ) can get you if you don’t select the appropriate stocks and ETFs.  I have learned not to ignore what the charts are telling me. To rely on big up days with volume ( conviction ) saying buy….is not enough.  In the case of Amazon, I walked into a whipsaw created by someone’s obsession to “get ” Jeff Bezos, founder of AMZN and owner of the Washington Post. It wouldn’t have happened if I had concluded just from the chart that there is no reason to rush back in.

So, there is a smile on my face only because I now know that charts can not only  help me quickly separate  equities that deserve analysis, but  that charts can be useful in telling me which stocks, above all others, are ready for more money or are not looking like compelling vehicles

Richard Maurice Gore

Leave a Reply