Ivy Portfolio Status 42615

My implementation of the Ivy Portfolio by Faber and Richardson is to use tactical asset management with each of the 5 domains to diversify in: Bond Funds (AGG, BND), Real Estate (IYR, VNQ), International Stock funds (EFA, VEU), US Stock Funds (SPY, VTI), Commodity funds (DBC, RJI). When my technicals give me an entry, I put money into one of the two funds in the domain that is signaling up. Right now, I am in SPY, VEU and DBC. See charts on those below. I am half strength in DBC because the fund is well below its 200 day moving average and will have to work its way back up. VEU is moving up the strongest, and I think that is because of the QE program ECB President Mario Draghi has Europe in.

In my last post I had mentioned that MSFT needed to break out of its downward pattern… and it did and gave a buy signal before earnings announcement. Unfortunately MSFT is not something I invest in. It behaved very well and gave an up signal prior to the earnings announcement and then jumped up…. there were investors already betting on the up move before the earnings announcement. Could it be that they knew the good news coming or was that just chart optimism from the double bottom?
See the refreshed MSFT chart below.

MSFT chart below:

Is it time to buy MSFT? 4/11/15

A friend of mine asked me if it was a good time to buy Microsoft now as it had come down from its high. Show below is daily chart on MSFT.

MSFT has been in a downward signal since the end of last year. It is still in the throes of multi-month pullback - see the blue line sloping down touching the local highs and being unable to cross the trend line... I would wait for that trend line to be broken and an uptrend to be established before going back in. In an uptrend the 50 day ema should be above the 200 day ema ... It is currently opposite of that. If you are a contrarian or aggressive investor then you could enter... but I am not.

So far the price is holding above its support which is around $38-$40. It may start moving up or could break down below $38. One could take a chance and buy keeping the $38-39 as a stop loss level depending on appetite for loss.

I prefer to trade the uptrend by buying on dips ... for example you will see on the chart larger arrows which give the primary trend direction and small arrows which are the contrarian signals suggesting when you can buy on the dip if the larger arrow is also pointing up. Earnings season has begun. Perhaps the market is waiting for earnings news to decide which way to turn.

401K Monthly Analysis - The Trend Pauses

The S&P 500 (SPY) remains in an uptrend but short term in a pull back. As one of my IIT classmates and expert market Guru from India, Deepak Mohoni states “When you buy on pull backs you can only be wrong one time”.  There is a saying that “the trend is your friend, until the end”… and right now we are in a pull back.

My chart on SPY shows an exit long signal from 2/2/15 and I am taking a break from participating in 401K funds. See chart on SPY below. I am conservative as far as investing is concerned and will give up upside gains to avoid large losses. I show long signals on IYR which is a Real Estate ETF and also in VEU which is a Global fund excluding the US. TLT, Long Term Treasury fund also shows an up signal. I am long these funds.

In my current employer’s 401K funds, the top choices are Fidelity Growth Strategies, Fidelity Blue Chip fund and Fidelity Div Intl fund. Royce Opportunities is also showing some recovery from its large drop. Attached is a chart on Fidelity Growth Strategies. Since SPY is showing an exit long, I am out of my 401K.

In my past employer’s 401K fund, the top choices are Cohen & Steers Real Estate fund, Fidelity Spartan Extended Market Index and Fidelity Mt. Vernon Growth fund.

Some market pundits are trying to stay ahead of the market by calling for a potential drop in markets for 2015 since the market has been plodding upwards for 6 years. SPY or the S&P500 has never gone into a major decline without the 50 day exponential moving average (ema) dropping below the 200 day ema. From the chart on SPY I see that the red line (50 day ema) is still above the black line (200 day ema). I think there is still plenty of time before we see a major decline … at least 3-6 months. I try not to get too ahead of myself with long predictions as no one really knows. However based on the past, I would say we have time… and yet I am exited on my 401K… I am conservative, no doubt. I still follow the Ivy Portfolio signals and right now, it has me long in IYR, VEU and even DBC. The last one is a commodity fund and it has dropped to half its value… and I just entered it end of last week. It looks like it made a double bottom. If the world can reach an agreement with Iran on their nuclear program, then oil will flow freely from Iran into the markets and we could see past support for oil breaking and oil going much lower. There is some thought that there will be a greater need for oil tanker storage. Stocks like NAT (Nordic American Tankers) may be a better investment as oil producers produce more and more oil…