Ford (F) is Still Trending 04/27/13

I have friends at Ford and our company does business with Ford. We supply interiors parts for them and that makes me an expert of sorts on certain products but what about the stock? Firstly I will say that I do have a small position with Ford and that I plan to increase that position if the signals come my way. I will let technical analysis rule my decisions and not anything else.

Currently F has just announced earnings and it looks like the market is happy enough to boost it past its last resistance level that was around $13.45. I shoulda woulda coulda bought some more stock when it dipped around 4/18 to $12.70. But that opportunity is gone now. Next one will show up when it starts to tackle the $14.00 to $14.25 level I expect. Perhaps I am overthinking this. It is always tempting to predict future behavior based on support and resistances!! And if it crossed that resistance level, then we could see some serious movement upwards towards territories that Ford shareholders would really be joyous about! I can see the greed side of things affecting my commentary…so let me look at the down side. Current support is at $12.65 and if we go lower it is at $12.10. My thoughts would be that if it dropped below $12.00, then it would be certainly time to close all positions as a key support level would have been broken.

The stock is definitely in an uptrend as can be seen by the upward sloping blue trend line that touches the various higher bottoms. A solid warning sign to sell will be when that is violated. With the earnings announcement behind us, I see this sloping upwards. With energy and gas prices likely to hold at current levels or drop, I will keep a watch on this stock for additional buys.

Karen the Supertrader 4/21/13

Karen   $100,000 to $41 Million in 4 years

https://www.youtube.com/watch?v=cXy9HoWX0es 

…  this is a very interesting interview but only more interesting when you know that the man interviewing him is just as big a success story – Tom Sosnoff, the man behind Thinkorswim..

http://www.dailyfinance.com/2009/11/08/tom-sosnoff-a-qanda-with-the-600-million-man-behind-thinkorswim/

The first time I met Tom was in Chicago. I had taken a vacation day from work and driven to the Trading Show in Chicago with a good friend of mine. Tom was at this booth called Thinkorswim, wearing this beret type hat. If you don’t know Thinkorswim, you are probably not alone; but if you are an options trader, you will most likely say that it is the best options trading platform plus much more today.

https://www.thinkorswim.com/tos/displayPage.tos?webpage=paperMoney

Thinkorswim was purchased from Tom Sosnoff by TD Ameritrade, who finally did the smart thing – buy a top quality platform, recognizing they could never create anything like it. Yes – I like TOS (Thinkorswim) as most people familiar with it call it. TOS is not as cheap as Interactive Brokers or Tradestation; so be wary about that, but otherwise, it is fantastic. It does everything except make you money – for that you need someone like Karen the Supertrader.

Click on the link above and hear Tom’s interview with Karen.

Karen took her $100,000 in savings that she had with her Merrill broker and started trading it. She had spent some hard years working at her full time job while learning to trade options and stocks with the $22,000 “PhD” class offered by Investools,. She says the classes took her 1 ½ years to complete but it piqued her interest. She had her “Ahaa’ moment and went out and left her job, to trade full time. In 2007 – 2008 she made her $100K turn into $150K. That attracted interest from friends and the account grew to $700K. She started two funds and in a few years had taken the $700K she had from others and her own money to $41 Million!!! Wow!  And she has not stopped there. I am not sure of this but I believe she is past $160 million now. She has 6 people working for her.…

So how did she do it? Listen to the interview. It is not quick or easy ….”It is like learning a craft. It takes years” as Karen says in her interview. She had her breakthrough when she stopped trading stocks. She instead shorted premium on far out options. I can only imagine the risks she took and would love to know exactly how she handled the flash crash… she has been tested. She has very few drawdowns but I expect they are huge. Still, she tells you how she worked hard at learning her craft even while pulling a full time job, as she traded in the evenings and night while she learned. Most of us have ‘other priorities” – family; friends and so on. In order to be great, sacrifices have to be made. Karen has certainly shown us it can be done and by a 50+ year old retail “Supertrader”.

 

Bull vs Bear 4/13/13

Saturday I listened to two very good speakers at our local AAII (American Association of Individual Investors) Chapter.  John M. Simms, Jr. Ph.D., CFA  took on the bear side while Dennis Stearns, CFP sided with the bull. They first presented the economic climate, then looked at valuations for the market and what this means for withdrawal rate for retirees.

John Simms started off saying the weight of the debt that we carry will hold us back despite our innovations and entrepreneurial spirit in the USA. Last month 88,000 people were added to disability while only 81,000 jobs were added. A dismal picture indeed.

Dennis Stearns described the economy still in a muddle through mode. There is a skilled worker shortage. High unemployment for those with less than a High school diploma but not the case for college graduated people. Real Estate in some areas is booming. and home inventory has dropped to 4-5 months in some cases. Shiller says home prices will go up 10%.

The other silver lining is that the US will exceed Saudi Arabia in oil production by 2015-2016, not counting the boom in natural gas. The US had an average of 200 oil rigs in the 2004-2009 time frames. Since then we are now at 1300. There is also a renaissance in manufacturing in the US and innovation is alive and well.

The balance sheet of most companies is healthy. The stock market has more legs. Given the huge jump in the first quarter, history says that we will end the year even higher.

Dennis would be happier if we saw a correction as we are due one. The correction would enable us to achieve higher highs. John felt we are due for a larger 20% correction. Current corporate profits are at historical highs.

After the recent drop in gold, John Simms who is a gold bug, was asked what he thought of gold. John said that gold is a good hedge against poor policy and he feels we have plenty of poor policy. John bought gold starting at $900. He is catching the falling knife buying gold miners now.

 The speakers were asked many questions. For example how would they advise building a stock/bond portfolio if they were concerned with bonds dropping in price as interest rates go up? Dennis still likes the 60:40 rule except he weighs the 60 on equities with high quality dividend paying stocks and keeps plain vanilla municipal bonds and uses bond market timers to give him a better buy and sell on bonds. He also likes First Eagle Global.

In the last segment Dennis showed a chart as to how long a $1,000,000 portfolio would last if one pulled $50,000 a year if you retired in 1973 and another case with 1982. The two pictures were opposite. In the first, money ran out by 1993, while in the latter, the portfolio would have grown to $11,000,000 by 2012!!. That suggests that we have to be flexible and pull less out of a portfolio if the market does poorly in our earlier years after retirement - although I am not ready to retire yet!

Or, lose less money in the markets, as I see it, using methods such as outlined by Faber and Richardson in “The Ivy portfolio”.  I feel I know how both these fine gentleman think.

Bond Funds Flying High? 4/7/13

TLT gapped up Friday morning. TLT is a long term treasury bond Exchange Traded Fund or ETF that can be traded like a stock. See attached chart below.

When was the last time TLT behaved like a high flying tech stock and gapped up in the morning open?? Well the answer to that is April 9^th 2012. And what happened after that? TLT rose for the next 2-3 months while the market corrected itself and the S&P500 (ETF known as SPY) dropped by about 7-8%.

I am getting a little ahead of myself here. I do not want to be a predictor – in fact I have vowed to stop looking at other people’s predictions because it throws me off my own game plan. Information like that sticks in my brain and when I try to act on my own technical charts, I will pause or do something different based on what some other market Guru said. I need to free myself of those talking heads. They are like shackles that tie me down. Bite me! So I vow to only follow my own technicals…I will live and die by my own charts. So now do I want to be a predictor of things to come? Not really. Just that my bond fund charts are showing an Up signal and I will look to get in on a dip. I should have entered a position at the first sign but I did not. Mentally I was thinking bonds are in for a collapse. But that too is an opinion. Ignore opinions. What does the chart say? Up and its pretty clear signal.

GLD is still down but I will keep a watch on it to see if it perks up.

The other action I took was I sold vertical call spreads on SPY early last week against some small long positions I took. The long positions look weak but they are hedged with the sold call spreads. The week before. I was getting close to having to correct the first position but not needed as of now. Selling call spreads is profitable when the market goes sideways or down. It is a soft hedge of long positions except unlike buying a put which I will call a harder hedge, you make money if the movement is sideways or modestly down, as time value erosion is in my favor.

Will the market finally correct? It has been pointed up for a while now; and still does. First warning sign was the price divergence on SPY that I wrote about, and now the TLT type funds flying high… Careful.

401K Monthly Analysis – April’s Fool 4/1/13

No change from last month’s 401K. SPY remains pointed north but showing a price divergence against its indicator like the MACD. I have posted this in a separate blog.

I tend to err on the side of caution and feel like an April Fool for missed opportunities! No more listening to others.

When I look at my previous employer based 401K account, the funds to be in are Artisan Midcap Value, Spartan Ext Market Index and Vanguard Explorer Admiral. This indicates no change from last month.

With my current employer’s 401K, the strength goes to WFA SPL Midcap VL, Fidelity Growth Strategies and Royce opportunity. Same as last month.