Tricky Trail to Follow

April 30, 2014

VTI is still officially on a ” buy ” ( price above 200 day moving average at month end ) and showing a profit of  58.12%  if bought on December 30, 2011. The buy signal has now lasted 583 days.

However, since January 1, 2014 VTI has appreciated only 2.1%. . Hardly enough to provide a living   !  So, I  ventured out of VTI and into other Index and Sector ETFs and enjoyed  a very similar result. Definitely not thrilling !

On top of this so-so performance, the market as a whole has been consistently flashing ” Non Confirmation ” via weak volume on any daily price gains which, at first glance, appear encouraging.

I examine the price / volume action of about 50 Equity and ETF positions every night.  In  rare cases where volume confirmed positive price action,  over  the next few days, there was no follow  through.

Where is this trail leading me ?  Away from” play in May ” …yes…..  Away from a Ukrainian Black Swan….yes.

It is leading me toward Investor Rule # 1 – DON’T LOSE CAPITAL.

To get a more risk friendly return I have begun to invest in some of the fixed income ETFs till things sort themselves out. ( BOND, HYS,JNK,HYG,LQD ).  I’m looking to minimize interest rate risk via shorter duration holdings.

And, at some point I would be willing to average down on Equity Index ETFs ( not individual  stocks ! )  if market action, the  Fed and Putin non- action indicate a break in the clouds.

At the moment, I’m continuing to sell into whatever  strength shows in any of my long positions.

GOLD ended April below its 200 day moving average, so it will be at least another month before I invest in GLD

Now, lets see whether 2014 will be a ” Play till May, then go away ” year !

 

Richard Maurice Gore

 

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