401K Monthly Analysis – Caution 7/1/13

My daily system on the S&P 500 (SPY) remains pointing down while my monthly 401K system is unperturbed and would have me in stock funds. I am cautious and have decided that when my daily SPY system says down, I will not remain in stock mutual funds. The SPY down signal means exit. Therefore I will not recommend any 401K funds to be in as I am personally in cash/money market funds in my 401K.

I  am committed to following my own systems and no one else’s. I am done listening to the folks that sell newsletters and predict what is going to happen. I know my system is solid and by following it, I will stay out of trouble and make money during good times.

How do I Learn Stocks Technical Analysis? 6/23/13

I was talking to an associate of mine. We had hit a decent trade on TAN that I wrote about previously. He asked me if I could explain how I knew to get into TAN when I did. This touches on the very basis of this blog. How do I learn technical analysis so that I can use it to manage my own money?

Part of the reason I started this blog was to be able to help map out a path for others who might be interested in self-sufficiency in managing money. Technical analysis is all about stock charts and using indicators based on price and/or volume to determine whether we should enter or exit a stock. This applies to stocks, stock derivatives like options and also to commodities and futures.

First step: Go buy a book like mentioned in my resources section… “Technical Analysis from A-Z” by Steve Achelis. You can download a free copy from Equis’ website but I recommend buying the book and reading it cover to cover and taking notes while reading it. Here is what is amazing. The price at Amazon is as low as $0.83 + shipping!! That is truly amazing. Here is the link to buy it (and I don’t make a cent of this)

http://www.amazon.com/gp/offer-listing/1557388164/ref=tmm_hrd_new_olp_0?ie=UTF8&condition=new

Get the book and read it. I still use the first edition with the black and red hard cover. I have read it several times.

Next step: Buy a magazine like “Technical Analysis of Stocks & Commodities”. Here is link to what the cover of the magazine looks like. You can pick up an issue at the nearest major book store near you.

http://www.traders.com/index.php/sac-magazine/current-contents

This magazine is for traders, want-to-be-traders and anyone who wants to understand stocks technical analysis better. I used to have a 5 year subscription and don’t subscribe to it anymore; but it was very helpful for me to read the articles and starting to understand the language used and indicators in this field.

Third step: You will need access to good software. You will want to start with something free. I would have recommended Metastock a few years back and still recommend the end-of-day software on the older versions but cannot in good faith recommend the latest Metastock 12. Reuters bought Metastock from Steve Achelis and seems to have changed direction. I love Metastock 11 but they have cut many of us down at the knees with the latest version. Instead of focusing on developing Metastock for the iPad and other mobile platforms, or developing it for direct on-line trading with experts using a brokerage partner, they have configured it to sell data – which I suppose is Reuters main interest.

I suggest you start with a neutral site like Stock Charts.

http://stockcharts.com/freecharts/

You will want to research and find the one free software that suits you best. I admit I like Metastock but it costs money, takes time to learn, and they do not take input from their users and seem to be going in the wrong direction in the future. Long term I plan to probably just use Thinkorswim charting software that comes with the brokerage platform. Here is their home page.

https://www.thinkorswim.com/tos/displayPage.tos?webpage=main&layout=homeLayout

They are now part of TD Ameritrade, which is a very reputable company. The download tab will allow you to download software free. You can use a paper money account. Not sure if you need to open a real money account to use their software but even if you do open a real money account with them, they let you use paper money account to trade with real-time data and see how you do without putting money on the line initially.

This is enough for starters… this is how my journey got started. I had no one to advise me on direction to take to learn, so I can now lay out a path for others to follow given I have self-taught myself, learned from my fiends at Mcubed and then later taken classes on options.

My current position in the markets is all cash. Bond funds, commodities like gold and silver, stocks, emerging markets, most funds all have down signals on them. I cannot predict how long it will stay this way but unless you trade inverse funds or put options or futures, it is better to sit out. Only long signals are on inverse funds.

Volatility is Increasing 6/12/13

Earlier I had posted that I saw a down signal on SPY and have withdrawn from the markets – closed my long positions. Yesterday I saw another down signal on SPY using my tested and tried slow changing system that is typically biased to the upside. Also notable is the down signal on the Advance – Decline line supporting the down signals on SPY, which is my proxy for the US markets. See charts below. My chart on volatility also shows an up signal indicating the Fear index is rising.

Needless to say, I see down signals on IIF, the India Fund, on EEM, Emerging markets, on TIP and TLT which are my proxy for the bond markets and in GLD which is the largest Gold ETF. Even the US dollar is back heading South. So one wonders, what if anything is going up?

Inverse funds are certainly rising. In addition I see UDN the inverse US dollar fund up. The Swiss Franc is looking strong, and that can be traded using FXY. I believe I will sit on the side lines for a while as I sit in a hotel room on business and hear about the Japanese markets dropping 5-6% tonight....

I am longer term bullish however. The US Shale oil production in North Dakota is going strong and we are heading to being the largest oil producer in the world. But for now, it is time to pause and let the retracement take place; without me in it… 

SPY – Has the Tune Changed? 6/5/13

I noticed a down signal tonight on SPY after market close. SPY is a proxy for the market. This means I will pull back and close out position in my 401K and R/IRA and wait till the market turns back around. A down signal does not predict how steep or how shallow a drop will occur. I am cautious and conservative, and I do not like to stand around waiting for a bounce to sell.

I have also noticed the sharp drops the real estate markets have recently taken – look at IYR or SPG. Same applies for JNK which represents Hi yield corporate bond funds. Bond funds have reeled and so has EEM Emerging markets. No shelter in GLD which I have written about earlier.

Let us watch and see how this shapes up. Meanwhile I will sit on the sidelines.

401K Monthly Analysis – How High Can We Go? 6/1/13

The market has shown incredible strength this year. The conservative rich may very well complain about the Government’s policies and hang right but they must be doing it smiling their way to the bank or whatever off shore accounts they have their tax-free money in. For the rest of us toiling people, we cannot help but what wonder when will the axe fall on the market? And what if we haven’t participated in these up times? Do we get in now? A soothsayer I am not. All I can call is the market tea leaves as they show today. I am also affected by the “nearness syndrome” which is what happened last Friday – a huge 200 point drop in the Dow.

Starting with the overall market charts we see that the market is still pointed up but  generated a short term sell signal (small arrow down on the chart below) while the primary signal remains Up. I would tackle this by taking some money off the table and not commit all my monies into the market. Don’t forget the old adage “Sell in May and go away”. I think you can come back in October. But this has been a strong year and I don’t think we are falling off a precipice. The Bond funds are looking weak and I have exited them all. When the market does signal down, I am not planning on hanging around; but that is for another day.

I synchronized all my folder funds with my employer’s current 401K funds. Over time they drop some and add others and I have been remiss in my updates so I did it this weekend. My top fund choice remains same as last month, WFA SPL MidCap VL with chart below. It has been breathing some rarified air as it has climbed and climbed while knocking down 52 week highs. Next choice is Fidelity Large Cap (chart attached) and then Fidelity Blue Chip growth as third. Behind these is the Royce Opportunity fund but I do not like to pick something that will charge me a redemption fee unless I stay in it for 90 days, so I won’t go there.

For my previous employer’s 401K the choices are Spartan Ext Mkt, Vanguard Explorer Admiral and Fidelity Low Priced Stock fund. Fidelity Growth comes in 4^th and all these are the preferred choices; but consider leaving some money in cash and one’s powder dry.