And here is the SPY Up Signal! 12/23/11

Got the second Up signal on the markets in 2011 generated by my trading system on SPY.... lets hope the markets know that I got an Up signal on the S&P 500 (ETF: SPY) and cooperates.. I am long biased now but only very modestly invested in my portfolio, mostly cash. Will look to go long on individual stocks as I get entry signals.

SPY sets off Potential Buy Signal 12/22/11

It’s been a long wait for my system to trigger a buy signal on the S&P500 (ETF:SPY). Only had one this year and it was short lived. Well, I have another on 12/22 close of business. The expert commentary is Buy if SPY exceeds 125.39, which is the day’s high.

I am not one to predict too much long term. All I tell myself to do is follow the signals from the systems that I have created. Still, I smell a little long movement in the air and during the last week after the first huge 300 points DJ30 up day, I put in an order to close my PBR put positions at a profit and also TLT at a profit. I was long on TLT which rises when the markets falls. I was also holding put positions on PBR which made me money as PBR fell. But that could be changing, and it is time to reel in the profit it generated, before it turns into a loss! I think we will see some upside here

Why? Well, when I look at the chart on SPY, it is nudging the top of a resistance trend line. And my ICE and other short term indicators are point up. See chart below. It has been a long grind sideways this year within the narrowing triangle shown by the two trend lines in blue. If SPY breaks out of the trend line, there is likely to be a short term push for further movement in the same direction as traders would see their stops hit. Along those lines, I also sold of part of my SPY put options that provides protection against my long position in my 401K. Maybe this is the Santa rally we were hoping for, but volume is pretty muted. Still, if it breakout, volume can come back quickly as well as a surge, and I don’t want my contrary positions turning into a loss and holding back a rise in my portfolio holdings.

TLT Rising, PBR Falling 12/18/11

Last week I got stopped out of my GLD position. Kind of glad that I had a stop, although it still gapped down and pinched me for a loss. Since then GLD shows a down signal.

Long trade:

The TLT trade on the other hand looks good. TLT is iShares Barclay’s 20 year Treasury Bond fund. It is an ETF.  I remember the conversation with a friend regarding bond funds and his concern as to what would happen to bond funds when interest rates rose. The technicals have been quite strong for TLT and that is my guide. The last buy signal on TLT came on 11/2/11. There was also another short term minor buy signal on 11/30/11. That was my entry point. I think it is getting a little rich and I may bail soon. Still, there is no exit signal on TLT.

Short or Down trade:

I am also using short term put options to trade PBR which has a down signal. It is a fast swing trading system based on end-of-day, and I look to make money up or down. My last entry was as shown with an ellipse drawn around the down signal on 12/8. By buying put options, I can make money on the trade as long as PBR goes down. PBR has dropped and I notice also a breakdown of the support line drawn touching the previous bottoms. PBR is Petroleo Brasileiro. Brazil’s oil boom could be seeing its first bust.

No Change 12/10/11

No change from last week. My systems are pointing up with the exception of my ICE system on SPY. Both of my regular systems are saying Up for Dow Jones 30 (ETF: DIA) and for the S&P 500 (ETF: SPY). My 401K monthly system is partially long biased. Summary – I have long positions that I am hedged on. Meaning I make money if the market goes up but modestly. If it goes down, I lose money but modestly. The markets are hoping for good news from Europe and wants to go up. But the underlying fundamentals are severe and holding it back.

I am also long in GLD (Gold ETF) and TLT (Long term Treasury bond fund) and entered a small put position on PBR (Oil) – all actions based on my technicals of course and not fundamentals.

401K- No Change from last month 12/3/11

My monthly analysis of my two 401K accounts showed no change is required on my selections. The system is split between equity and bond funds as it is in a transitional state.  Until I get a clear signal to go long 100%, I will choose to stay where I am, which is at about 40% long equity funds. On top of that I am partially hedged with put options on my long equity positions, as this market is fickle and could drop in a hurry.

Last week felt good as my long positions all recovered back nicely. Still, Europe’s problems are long term. Last week we all learned that there was an inter-bank liquidity problem and they agreed to do swaps for the US dollar. Let me see… Europe’s currency is in shaky grounds, and may collapse, and the US Fed decides to swap our US dollars for the Euro?? Makes good sense doesn’t it, if you are a contrarian and in the business of bailing people out. Who will bail us out??? Or are we too big to fail?

I am attaching as examples, a couple of charts on funds I am holding in my 401K. One is an equity fund; the Artisan Mid-Cap Value and the other is the Fidelity Govt Income Fund.