Gold - AU 10/29/11

Gold - A precious yellow metallic element. Atomic number 79. Specific gravity 19.3 at 20 degrees C.

Friday I got a buy signal on GLD. Usually I like to see a pullback before I get in but the better method might be to get in partially and then add to my position when there is a pullback.

The simplest way to own gold is to buy into the Exchange Traded Fund GLD. It is not as nice as actually having gold certainly, but it is more efficient to buy and sell it just like a stock. I love the look of gold; whether it is the 22 Kt jewelry that my wife owns (and is safely in the bank vault) or the gold 1 oz coin that she has in a necklace (that is also in the bank vault). We don’t own that much of gold, but the investing public certainly is trading GLD in larger and larger numbers. I was not surprised to find that the volume of the stock Coca cola (KO) traded every day is around 12,500,000 and is half that of the volume traded in GLD, which is at 23,500,000.

My current chart on GLD is attached below. No guarantees that this will be a winning trade. But as part of my alternate investment portion of my portfolio, I have decided to keep gold as a certain percentage of it but using tactical asset management (timing systems). That means when I get long signals, I will buy gold and sell it when I get a sell signal. In the long haul, I will make a decent return on GLD but I have to keep in mind that any one signal can turn out to be a loss.

Waiting for my long entry 10/23/11

The market has been on a fast rise and my systems have flashed some long signals recently. The DJ30 symbolized by the ETF, DIA has now broken through its 200 day exp mov avg. That is a positive sign. I expect SPY to do the same.  The tough part for me is to be patient and wait for the pullback. Even tougher part is deciding how much pullback is enough and when to enter long. I want to go long when the trend is up but buy on a dip. In my 401K it is simpler as I will simply react to my 1/month analysis. I suspect I will see some long entries but that is TBD next week. No one said this personal portfolio management business is easy when you are a conservative manager and don’t like losses. Still, I should not complain.

CREE has not participated in the markets improved behavior and is still in a down trend. Not good. AMD is also looking very weak and has no sign of life. ORCL looks better. The solar companies have got annihilated. Look at FSLR and TAN and how bad they look. Those would have been terrible for covered calls. It is a mixed bag in the conglomerates that I track. TXT is showing a little life but volume on the up side is fading. JCI is holding up and so is TYC.. HRS is still weak after its fall from 53 to 37.  IR must be reacting to its last fundamental news – probably less than optimistic. In the energy area, it is again a mixed bag. AES, BP and SU Suncor energy are moving up but the coal companies are hurting. PCX and ANR are way down. Materials companies have taken a beating as well and some are showing signs of wanting to get back up. DOW has a buy signal but SCCO copper is still down and FOE is still reeling from its dive down. RGLD has come down from its pedestal. X has moved down but with a divergence is looking like it wants to go up. In the currency sector, I see buy signals on FXA, FXE and FXY. UUP the US dollar is long but has been swooning of late as the US markets have climbed. One sector that has weathered the storm well are the non-cyclical; CL, CLX and HNZ. I like ketchup. Perhaps I should look to do some covered calls with these. In my transportation watch, I see F moving on up and FEDEX is also acting perky. The Utilities are also holding up well while paying nice dividends. DUK is certainly on a tear.

Summarizing my look at my stocks in various sectors, the non-cyclical and utilities look strong. Transportation is showing some early strength. The rest are all split and you have to find your spots. Think I will wait for the pullback.

Is it Time to Buy? 10/16/11?

The Dow Jones 30 stocks represented by the Exchange Traded Fund DIA fired off a buy signal last week. On the basis of the buy signal the answer is yes, it is time to buy; but I would prefer to wait for a pullback. I think it is inevitable, given the fast rise we have seen in the stock market in the last two weeks. I see that DIA is now hovering right at its 200 day exp moving average. That is looked upon as a resistance line and I am thinking that DIA will pullback, gather some strength and then climb again. Still, it is a lot easier not to second guess these signals and just follow them.

My 401K funds analysis is due next month, so I do not intend to jump in and violate my 401K fund management rules. If we keep up the momentum, then my 401 K monthly analysis will also pick up the up signal and tell me to get back in to rising equity funds. I can wait.

I am regretful that I missed picking up the buy signal that was on SNDK a while back. I saw it but did not act upon the information. Why? Because I am still somewhat plagued by a hesitation to enter stocks when the market majors still have a down signal. That is the super conservative nature I have. Yet it is logical that before the major ETFs perk up, we will see faster action from technology areas like SNDK.

I took a quick look at CREE and it still has a down signal although it has recovered from 24 to 29. It may be another stock to watch, although the long downward plunge since January is foreboding.

The 50 day ema (red line) on DIA is below the 200 day ema (black line). It will take sometime before this becomes another major up move which has to have the 50 day ema above the 200 day ema. If it wants to do its slow gyrations and collapse and take us to deeper depths, as the gloom and doom scenarios suggest, then we will get a down signal in due time and that might be quite a good spot to take on some put positions on DIA and make a little money on the down side…

For now, there is an Up signal and I will look for a dip to try to put on some long positions.

Growling Bear or Pooh Bear? 10/11/11

“It is far better to be wishing you were in the market when you are out than wishing you were out when you were in”

With the market taking off like a rocket over the several days, I was wondering about my post about the growling bear! In fact the bear appears to have been fed some German honey and is sitting back contented like Pooh bear from Winnie the Pooh. The bulls have charged forward albeit on rather low volume today.  

It is far better to have a system and stick to it in a disciplined manner, as long as the system is sound and solid in its foundations, than trade based on recency. I believe in the systems I have and when the signals give a change, I will change. I want to be a flexible reed. I can sway in the direction of the wind without breaking. Living in South Georgia, I have seen too many rigid pine trees break in a harsh winter storm.

Yes, I saw the reversal signal early last week

Yes, I feel bad I did not place some long positions on the S&P to pick up some of the gains from the reversal

No, I could not have expected the gains to have been so much so quick. My technicals are still weak and it is better not to fight the technicals.

But when I get a change in the charts through my trading systems, I will change my posture. For now I remain wishing I was in over the last few days; but glad I have been out over the last couple of months.

401K Monthly Analysis 10/9/11

Ran my monthly analysis to see which mutual funds I should be in for my (2) 401Ks. Results are same as last month. The only two funds that popped up green were Fidelity Government Income Fund and PIMCO Real Retn Admin fund. No change. I remain in my allocation of cash, Fidelity Government Income and PIMCO Real Retn Admin, depending on each 401K choice.

The market is again at a crucial juncture. After the bounce last week, it is drawing in breath before trying to break through the previous high on 9/27. If it succeeds in doing that, then I would expect a pullback that would accomplish a higher low and another move up. Will that happen or will the market get run over by the bears who will use the bounce to take the market down another leg, deeper than the last one? No one really knows.  The pundits will only guess. Half of them will be right and half wrong! The technicals still say down and my monthly system told me I needed to remain defensive in my 401K fund choices. That is all that matters.

The Bear is growling 9/30/11

Let me point out that my chart on SPY gave an exit signal on long and my 401K monthly system has had me in cash, bond funds and Fidelity Government Income funds for a while now and this has kept me out of recent troubles. I hear the bear growling. When I look at stock charts I am amazed at some of the drops I see. IR has dropped from a peak of 51 to 31. Solar technology has been decimated. The ETF TAN has gone from a 2011 peak of 9 to 3.4. HRS after failing to rise above its previous high did a double top at 52 and is now sitting at 35.Remember my blog on HRS where I said that I would buy HRS only if it crossed its previous high and broke out?  JCI did the same and was turned down and double topped at 43 and is now at 27. And I think there is another leg down coming. Energy has been heading down as the dollar has been strengthening and ANR dropped from 68 to 18.  The pristine DJ30 stocks have held up well under the circumstances but even they have been feeling the heat. Look at CAT which dropped from its 116 peak to 77 this year. And the financial sector has been hit with Europe’s woes and the inability to shed itself of the mortgage foreclosure problems in the US. Look at the gold standard in financials in the US, Goldman Sachs GS, dropping from 175 to 95. And we don't need to talk of BAC or C.

My sense is that many individual stocks have dropped much worse than the large index funds and while the market reports the big indexes like the Dow Jones 30, many individual portfolios have been hurt badly already. The broad indexes have been in a trading range for the last few months and been bouncing off a support. We are very close to that support again and my gut tells me that support will eventually fail to hold. The global fundamentals are just too weak and any solutions in Europe and US are all temporary. We have to face pain ahead; but not in my portfolio if I can avoid it.

I was looking at a scan I do in TC2007 which says “Climbers with Volume”. This scan idea came from “Lady Climber” who was knighted by the Worden Bros in TC quite a few years back. You have to know the TC and Worden Bros system that used to knight letter contributors to know what I am saying but that system is also unfortunately gone... Lady Climber funded her kid’s education by buying these stocks that were Climbers and she showed us the scan she used to pick those stocks. Here is what my version of that scan shows. There were only 13 (unlucky 13) stocks that showed up on the scan today. 10 of them were bear funds! The remaining 3 were stocks like Goodrich GR which was recently purchased at a high price and is now unlikely to move at all. In the currency markets UUP – the US dollar has been showing some upward trajectory.

I have run for the hills. There is a chance that support will hold and we will see a surge back up. If that happens, I will certainly look to jump on that bandwagon. Meanwhile we are still in one of those bear flag sideways movements and the eventual next leg will be…. no one really knows but quite possibly down. Why risk my capital while the bear growls? I will take some small bear positions if there is a breakdown. In any case, I am glad I am sitting out for now. I don’t have to get mauled by the bear, regardless of what some of those Wall street brains want me to think.