An Idea for a Long Trade 10/27/13

A simple strategy for a long trade is to align the market, the sector and the stock in the same direction. When the tide rises, it takes everything up with it.

1. Using technical analysis, I see that the market is in an upward move and is signaling long. See chart on SPY (S&P500) below.

2. Next take a look at IYR, which is an iShares US Real Estate ETF (Exchange Traded Fund). The chart right below SPY is for IYR and it is also long.

IYR fund summary:

The investment seeks to track the investment results of an index composed of U.S. equities in the real estate sector. The fund generally invests at least 90% of its assets in securities of the underlying index and in depositary receipts representing securities of the underlying index. It seeks to track the investment results of the Dow Jones U.S. Real Estate Index 

3. Now take a look at a chart on a real estate company Hovnanian Enterprise HOV.

HOV Business summary:

Hovnanian Enterprises Inc. designs, constructs, markets, and sells residential homes in the United States. It builds garden homes, townhomes, single family homes, mid and high rise luxury homes, estate homes, adult lifestyle communities, attached and detached homes, urban infill locations, and townhomes and condominiums. The company also provides mortgage loans and title insurance services.

HOV just signaled long. Also the trend indicator on the color strip below the chart went from red to green.

è It is time to dip my toe in HOV. If we get a pullback and a secondary buy signal on the HOV chart, I will add to my current position.

We can never be sure if a trade is going to be successful or not but aligning the market direction with the sector and then the stock is a good way to increase my chance of success.

Debt Disaster Avoided – Market Signals Up 10/20/13

The Republicans caved in on a no win scenario they were pushing and the markets breathed a sigh of relief. The story here is how the bond markets showed little fear despite everything going to the last minute. It is somewhat depressing that our politicians shut the Government down and took us to the brink of a potentially disastrous scenario - one that we have never been on.

Still, my focus is the markets and I am surprised that the bond markets showed no fear at all. After the decision to kick the bucket a few months out, there was a strong move upwards. I was in Germany with not much of a chance to post given how busy my days were. Love the German food, the beer, the rail system and the showcase of plastics technology I saw there.

Here is a chart on SPY showing the strong up move. Same with IYR. Even TLT the long term Treasury bond fund has perked up. Time to stay long.

401k Analysis during a Government Shutdown 10/5/13

With the Government shutdown, the markets gave been slowly gyrating downwards. It is behaving in a manner where it is reluctant to go down, and is waiting for an opportunity to surge back up; but that could be my overactive imagination. All that is evident is that the markets have now shown a down signal on the Dow Jones 30 and one of my systems has also shown down on the S&P500 (SPY). My very slow systems still has SPY pointing up; but this is a time for caution. The politicians in Washington are taking us to the brink. They cannot figure out how to reduce the deficit and one party seems determined to pull down achievements of the other. I think both parties are acting childish enough to make us default. This may cause serious volatility. It may affect bond funds as well as the dollar and I think we will need to stay nimble. For myself, I am going to continue to follow the technicals and lighten up.

My previous employer’s 401K points towards the momentum being with Artisan Mid-Cap Val Inst, Vanguard Explorer Admiral and Fidelity Growth Co.

My current employer’s fund choices points toward Royce Opportunity, NB MDCP Growth Trust, WFA SPL Midcap Value, and Fidelity Large Cap. I stay away from Royce only because it has high redemption fees if you get out early; but it is worth holding if you can stay in it for several months.