401K Analysis – Summer Rally? 6/1/14

Are we looking at a no sell in May and go away and instead a Summer rally? Merrill Lynch fellow thinks so… and they think there will be a “nasty” correction later this year without defining what “nasty” entails. The media show knows how to latch on to these people and create a story out of nothing. The only thing we know definitively is the market is showing no signs of giving up its upward swing. And we know that by looking at the past behavior which is always correct. For now, my ICE system on SPY remains irritatingly exit long. Which means I am not invested long in my 401K. I should point out that I am taking long trades on my quicker get in and out stocks in my Rollover IRA, as well as invested in my Ivy portfolio system. Still, I will do the monthly 401K analysis and look at what are the strongest funds one should be in and here they are….

In my current employer’s 401K, the funds with the greatest momentum are Spartan 500 Index, Fidelity Equity Income and Fidelity Large Cap. WFA SPL Midcap VL has also started showing some movement upwards.

In my previous employer’s 401K choices, I see Cohen & Steers Realty, Domini Social Eq, Vanguard Inst Index as the strongest although Lazard Emerging Markets fund has been on a tear lately. I have been looking at the Lazard Emerging Markets Index and it has enough volatility to make me start thinking about using a technical trading strategy on it to make some profits. This is a weekly chart and does not require a daily monitoring at all. In the last 3 months it gave an up signal at $17.52 and it is now at $19.70. That is over 10% in 3 months… Also I notice that this fund had a very very steep drop in 2008. The trading system prevented the drop and exited well before the damage was done; but when the entry signal came back in 2009, it rebounded with over a 100% gain that first year... this happens once in 10 years, but it is something to be aware of to load up and capitalize on...I will have to integrate that as part of my strategy for 2015. No hurry.  I wish Fidelity and the other fund companies would not have all these rules about market timing and how frequently one could enter and exit a fund. After all it is my money…but then I am the little guy.

As Warren Buffet said, the first rule is never lose money and the second rule is never forget rule1.