Post: #176

http://nypost.com/2016/03/20/goldman-sac...ury-bonds/

Quote:Washington’s probe into the alleged rigging of the $13 trillion US Treasurys market by Wall Street banks has narrowed its focus to a handful of firms — including Goldman Sachs, The Post has learned.

In addition, European authorities have opened up their own investigation into possible Treasurys bid-rigging, sources said.

Investigators in the fraud division of the Justice Department have obtained chats and e-mails from Goldman that appear to implicate the company in manipulating the price of Treasury bonds, according to two sources familiar with the investigation.

Those chats and e-mails are being analyzed to determine if traders at other banks could be involved with any possible bid-rigging of US government debt, those two people said.

The identities of any traders in investigators’ cross-hairs couldn’t be learned.

Goldman is said to be cooperating with the probe, one person said.

In June, The Post reported exclusively that Justice was in the early stages of investigating banks for rigging the price of Treasurys, the largest and most easily tradable asset in the world.

Goldman is one of about 22 financial institutions that have been probed for any evidence that they may have manipulated Treasury auctions — a secretive process where banks and other financial services companies bid on the price of government debt, sources said.

Justice is also looking into whether there was price-rigging in the secondary market for Treasurys, where debt is sold at a premium, sources added. It’s unclear if investigators have yet found any improprieties or criminality.

Goldman, run by Chief Executive Lloyd Blankfein, is a major player in US government bond trading, and regularly submits bids for auctions.

In November, Goldman disclosed in a regulatory document that it was being probed for possible manipulation of government bond prices. Michael DuVally, a Goldman spokesman, declined to comment further.

Meanwhile, the European Commission, the law enforcement arm of the European Union, has opened its own investigation, joining Justice, the Securities and Exchange Commission, the Commodity Futures Trading Commission, and the New York Department of Financial Services, according to two sources.

The rigging investigation is the biggest scandal to hit the quiet — but crucial — Treasurys market since 1990 when Paul Mozer, a former Salomon Brothers partner, illegally cornered the government debt market. Mozer’s actions are known to readers of Michael Lewis’ “Liar’s Poker.”


Traders are thought to have rigged the market in two possible ways: by agreeing beforehand to keep bond prices higher than normal in order to boost profits in other positions that depend on higher rates, similar to how banks rigged the London-based Libor rate.

Banks also could have colluded to keep prices lower than normal to sell them at a higher price — and score a bigger spread — to their clients, who agreed to pay a fixed amount beforehand.


A Justice department spokesman didn’t return an e-mail seeking comment, while EC spokesman Ricardo Cardoso declined to comment.

Oh shit. I knew something odd must have been going on with treasury yield.

Post: #177

(01-26-2016 09:44 PM)Brodiaga Wrote:  Those who are interested in backtesting, can do it here, for example. https://www.portfoliovisualizer.com/ It takes a few minutes to run a back test or a monte carlo simulation.

I just came across another good website for portfolio analysis and backtesting for those who invest in index funds.

http://portfoliocharts.com/

In particular, this portfolio looks interesting to me (there are similar charts for a number of recommended portfolios, including 100% total stock market).

http://portfoliocharts.com/portfolio/ric...core-four/

48% Total Stock Market
24% Total International
20% Total Bond Market
8% REIT

From the charts, you can clearly see that over time, portfolio returns revert to the mean. For this one, CAGR is 5.8% if you held it since 1972. Of course, past performance doesn't guarantee future results.



This is the same chart for a total US stock market portfolio (invest everything in a fund such as VTSMX if you use Vanguard).
http://portfoliocharts.com/portfolio/tot...ck-market/

Post: #178

Weekly Stock Market Update # 9

Note- my reports are meant for individuals who like to trade individual stocks with some type of timing ( call it day, week or month trading, etc) as opposed to longer term mutual fund or 'vaue buy and hold forever' investors:

My indicators are still on buy signal. The key is to watch the leading stock action. A few examples of leading stocks:

Duluth: DLTH



Ollie's bargain outlet: OLLI



Both of these stocks are still in the IPO phase, which, I don't need to tell many investors, is the most exciting phase to catch a good stock.

DLTH "broke out" around the March 7 mark on that spike up on decent volume

OLLI broke out a few days later, approximately on 3/10. Both emerged from what I call " tight consolidation" areas. Some would call "handle"

As you can see they're both up from here. So, I'm watching leading stocks like these very closely now. If stocks like these can hold their breakouts, hang in there without declining too much when the market takes a breather and corrects a bit and then continue to advance once the market does, this would be ideal. It would be indicative that we're still in a rally and it's going in the right direction.

Don't get me wrong, even though I consider these leading stocks, they could easily break apart and decline big time. So, run any stocks I mention through your own parameters if you're interested in the first place. Also, these two stocks are somewhat "extended" past their buy points now, at least according to breakout investors like myself.

When leading stocks start to break down, not act like they're supposed to when a stock is advancing and, in short, decline and have failed breakouts, it's time to go ahead and get stopped out and raise cash.

Thankfully, this isn't happening now.

We are, however, still in a long term downtrend which started in December so you have to be careful here. That is, the long term moving averages on the major indices still have a downtrending slope. Note the 200 DMA ( red trending line) on the Nasdaq:



Due to this direction of the long term trend, I'm keeping my "commitment" to around 50% invested exposure to play it safe.

As I mentioned last week, I think we probably made the low here several weeks ago and that the low is in, again pending the stock action. Things are holding up pretty well with only a few distribution days.

Today and yesterday were pretty good days, but the market over the past week or show has shown some weakness after this 5 week run up we’ve had.

Today, as you can see from the nasdaq chart above, we moved into the 200 day on the nasdaq (overhead resistance). Last Wednesday, we did have some distribution ( heavy volume selling on a down day)

I’m looking for a potential pullback here. On the DOW, The 200 day needs to “flatten out” and get out of that long term downtrend. I’m looking for a ‘right side’ to set on the overall market and then form a ‘pivot’ so it can breakout.

As far as sentiment, bull/bear ratio is still below 2 to one, which bodes on the side of bullishness, at least short term.

As things stand now, it seems we just went through a correction and the hiccups we had starting in last December are not a new recession/ bear market. Here are the reasons I think that:


* Extreme deflation - we do not have.
* Rising inflation - we do not have
* Inverted yield curve- we’re far away from that even though the fed is tightening a bit.
* Overvaluation on the market. We’re not at overvaluation now.

These are reasons I think we’ve seen a low.

In summary:

1. The Buy signal in tact
2. The market low has probably been established
3. Market was extended short term
4. Overhead supply ( downtrending moving averages) possibly an issue.
5. If a breakout stock buyer, allow stocks and emerge/breakout.
6. Adhere to stops
7. Look for new leaders

Post: #179

Am eyeing up some shares in the banking sector (UK & EU) for short / medium term play, will post on here once I enter with entry points and time. Willing to wait to summer post Brexit vote see how the markets react to impending EU exit for the UK.

Post: #180

Here's a link to Finra's Financial Literacy test. http://www.usfinancialcapability.org/quiz.php

It's 5 questions and only takes a minute or so. I'm guessing most here will get all 5 correct. The national average is 2.88.

Post: #181

(04-01-2016 03:45 PM)Omad Wrote:  Here's a link to Finra's Financial Literacy test. http://www.usfinancialcapability.org/quiz.php

It's 5 questions and only takes a minute or so. I'm guessing most here will get all 5 correct. The national average is 2.88.

The only slightly difficult question in this test is the third one. It's really sad that the average is 2.88. I don't expect it to be higher in other countries either btw, maybe except for places like Singapore.

Post: #182

As I mentioned on last week's post, I thought we may see some difficulty what with the nasdaq getting to its 200 day moving average.

Sure enough, on queue, Monday we saw a distribution day. Today, again was a big down day.

The 200 DMA on the nasdaq is still in a downtrend.

Also, the nasdaq is approaching the nice round number of 5000 and it's reversed off of that the past few days.

The percentage of stocks above the 200 DMA is about 39% on the nasdaq.

Hopefully what we'll see here is a sideways back and forth and no real correction again.

Also, like I mentioned in last week's post, I think we've seen the bottom, at least of this correction.

Bullish advisors is now above the bearish advisors. So, from a contrarian standpoint, this coincides with the pause and, so far slight, decline we've seen this week.

InSummary:

* Market climbing a wall of worry
* Sentiment not at extreme levels.
* Overhead supply issues at nasdaq 5000ish
* Flow of ideas slowing- meaning good stock set ups
*Don’t force trades
*Maintain leaders
*Stick to stops

Speaking of sticking to stops, I mentioned two IPO stocks in last week's post which were forming nice, potentially profitable bases.

One was DLTH. DLTH took a big pull back on hard volume earlier this week, thus, for me, "ruining" its nice base. I got stopped out making a small profit.



Notice the big red spike down three days ago. This is not how a stock in a good uptrend should act. Translation : stopped out and dumped the shares.

The other stock I mentioned was OLLI. Today, OLLI broke out strong on good volume from a strong earnings report;



See the big "spike" in price today. The stock gapped up at the open and stayed above the gap all day.

So, this development even strengthened the longer term prospects for the OLLI. For what it's worth, I think OLLI is now too "extended" to buy as it is past any good entry point, at least if you're a breakout trader like me. I just wanted to point out these two stocks and how they are shaping up since last week.

Finally, of note, gold and the gold mining shares ( silver too) have been in a new uptrend for a number of months and are setting up nice bases.

Gold and the miners were up today while virtually every thing else was down.

Maybe the brutal bear market that has plagued the precious metals and the miners for years is finally coming to an end.

Post: #183

Valeant here has likely bottomed. Yeah I'm 1 day late on the news. But if there isn't a huge surprise in the 10K coming out by the 29th, this could be a double in < 6 months. Think the bad news has pretty much been priced in, if the 10K/Q isn't half as bad as expected, theres's a pop to the upside. Will post my entry when I get in.

Post: #184

Sharing an article from one of my newsletters last week since it focused on Valeant VRX:

How to Smell A Rotten Company A Mile Away
MICHAEL LEWITT

April 1, 2016 0

Every time you think that the embarrassment known as Valeant Pharmaceuticals International, Inc. (VRX) could not worsen, the company proves you wrong. Just two weeks after announcing the return of CEO J. Michael Pearson after a well-deserved sick leave and the withdrawal of 2016 earnings guidance, VRX announced new guidance and earnings that sent its stock down 50% in a single day. Sure Money readers made as much as 700% on my recommendation to purchase March 50 puts and June 50 puts on the stock.

Then a week after that, the company announced that it was firing Mr. Pearson (something I called for last October), that its former CFO Howard Schiller had cooked the books (see under “scapegoat”), and that Bill Ackman, one of the company’s largest shareholders (whose fund managed to lose $1 billion in a single day on VRX stock) was joining the board. Mr. Schiller refused to resign as a director and denied the allegations (see under “the circus has come to town”).

As one of the few people to point out the company’s flaws (along with Jim Grant and some others) and warn investors to short the stock last October, I received the usual share of angry mail from readers who disagreed with me. Among the criticisms I received was how dare I question the judgment of the large hedge funds that owned big stakes in the business. After all, they are run by very smart people with enormous resources. My response was that I learned to think for myself a long time ago and my work on VRX uncovered a house of cards.

Not long ago I explained how investors get “tricked” into buying disasters like Valeant.
Today, I want to tell you how to avoid these train wrecks in the first place.
Here are the signs I watch for – and that you should watch for, too…

Everyone associated with Valeant should hang their head in shame. This ranks among the most disgraceful and inexcusable failures of governance and analysis in the annals of Wall Street. The flaws at VRX were, of course, obvious to anyone with an objective and critical mind.

The company’s financial statements were filled with non-GAAP adjustments that misrepresented its true financial condition. The company was highly leveraged and unduly dependent on acquisitions for growth and high-priced debt to fuel that growth. The company’s business practice of raising drug prices by exorbitant amounts while short-changing R&D was short-sighted and, in my view, politically vulnerable. In short, its business model was unsustainable and its debt and equity grossly overvalued.

As usual, virtually every Wall Street analyst covering the company was complicit in leading investors over the cliff by joining management in pimping the stock and maintaining exorbitant price targets in the $175 to $200 per share range until the bitter end. Prior to the company’s fateful conference call on Tuesday, March 15, 21 of the 23 analysts covering the company had “buy” or “hold” ratings with an average price target of $136 per share, double its closing price on Monday, March 14 of $69.04. Several of them had stock targets of $200 per share. Why all of these individuals haven’t been summarily fired is a mystery. As we all know, the stock plunged by 50% on the 15th after one of the worst conference calls in the history of company conference calls. At the opening of trading on March 31, it was trading at $27.07 per share (see under “ugly”).

There are probably too many lessons to glean from this disaster to list them all, but I will do my best to list some of the most important things that investors should learn from this disaster:

• Beware companies that inflate their earnings and misrepresent their true financial condition by reporting large non-GAAP earnings adjustments.
• Leverage is toxic (particularly when it is incurred during a period when interest rates are lowered by central bank policies to artificially low levels). There are very few exceptions.
• Companies that engage in unethical behavior are not investable. How a company makes money is as important as how much money it makes. The minute the Philidor RX Services news broke, investors should have dumped their VRX stock (which I told them to do).
• Companies that provide confusing or incomplete disclosure are also not investable. This is just as true of VRX as it was of Enron. VRX’s disclosure reads like a post-modern novel.
• Wall Street analysts are paid to promote the stocks of their clients, which renders their recommendations corrupt and useless (with very rare exceptions like the folks at independent firms like CLSA). VRX paid $398 million in investment banking fees since 2013. Anyone who follows Wall Street’s investment recommendations is a fool.
• Heavy hedge fund ownership of a stock does not mean that the company was discovered by “smart money” – it means that short-term investors crowded into a trade.
• Any fund that invests 20-30% of its assets in a single investment is behaving recklessly (see under: The Sequoia Fund, Pershing Square Capital Management), subjecting its investors to inappropriate risk, and should be intensely questioned by its investors.
• The fact that big name investors own a stock is no guarantee that the stock is a good investment. The trail of broken stocks owned by well-known hedge funds, private equity funds and other large investors grows longer by the day – SUNE, OCN, CNX, CHK, SHLD, LNG, GLEN.L, most energy stocks, etc. Investors need to think for themselves and not be swayed by the media and celebrity investors. The financial media is uninformed, simplistic and sycophantic in its coverage of activist and other large investors who, in case anyone notices, generate poor risk-adjusted returns with very few exceptions.
• Ignore pretty much everything written by the mainstream press. Now The New York Timestalks about VRX’s “serial acquisition of sometimes mediocre assets at inflated prices, partly in a quest by senior executives to achieve aggressive targets – at any cost, it now seems.”

But you rarely heard a whiff of criticism from mainstream sources of Mr. Pearson or the company when the stock was trading at a much higher prices. Instead, the television presenters at CNBC, Bloomberg, and other mainstream media were full of praise for a company that pursued a toxic business plan that preyed on the sick. You had to turn to people like me to tell the truth.

Sincerely,
Michael Lewitt

http://suremoneyinvestor.com/2016/04/how.../#deeplink

Post: #185

Valeant is quite possibly the Enron of the 2010s. No price is cheap enough for me to touch it.

As far as the broad market goes, we appear to be topping on the US indices. I'm starting to short the market again looking for 1,800 on the S&P 500.

Post: #186

(04-08-2016 12:45 AM)jj90 Wrote:  Valeant here has likely bottomed. Yeah I'm 1 day late on the news. But if there isn't a huge surprise in the 10K coming out by the 29th, this could be a double in < 6 months. Think the bad news has pretty much been priced in, if the 10K/Q isn't half as bad as expected, theres's a pop to the upside. Will post my entry when I get in.

VRX has been great for put selling, super rich premiums with the high IV, I sold puts when it got around $28, took a little heat but closed them out yesterday.

Probability of VRX being at $70 by October is under 20%. If it drops below $30 again I'll be selling more puts.

Post: #187

Heads up gents, ZH reported that an Austrian bank is going to do a bail in and Obama/ Biden will be meeting with the Fed in a closed meeting today at 10:30am.

Things might be getting interesting this week.

Post: #188

Market Update # 11

Market is still on a "buy" signal according to my indicators. We may be getting a little long in the tooth on this rally, however. We’re going into overhead supply around the 5100 level on the nasdaq.

The Dow is approaching the 18000 level. This is more overhead supply which often leads to a sideways movement or slight correction.

The Russell 2000 is still in a downtrend on the 200 DMA.

The advisors and investment blogger sentiment still are bearish which bodes well for this rally from a reverse psychology stand point. It's when everyone is bullish that often a correction is imminent.

This looks like the classic "lock out" rally. A lock out rally is one where the market keeps going higher and higher, the shorts jump on thinking a correction is due because the indicators show the market is over bought, then stocks break out, the shorts cover and all the time stocks keep rising and are going away "locking out" investors who haven't bought yet but would like to be long.

The recession scenario, I believe for now at least, is off the table. We just don't see many of the things necessary for a recession such as extreme deflation, rising inflation or a very overvalued PE on the market. The only thing that is somewhat bad is an inverted yield curve with the spectre of Fed tightening.

In summary:

* Selective environment - many stocks are "extended" if you're a break out buy so choose stocks wisely
* Don’t force trades
* Maintain leaders- if you have stocks that are up, try to hold onto them. Often the best stock you can buy (or hold) is one you already own with a profit.
* Fed on hold - for now
* Stick to stops - if a stock you own starts acting 'not right' stop out at determined levels and don't let a bad pick turn into a huge loss denting your portfolio.

Of note - MSFT is breaking out the past few days… It's looking good here, but and this is a big but, be careful as earnings are coming out. Earnings dates, as many know, can be a time when a stock can be very volatile and if there's any 'disappointment' on numbers, the stock can take a big hit.

Also of note - I mentioned DLTH and OLLI several weeks ago in a previous market update, as being IPO stocks having nice, potentially profitable chart setups. Both are up quite nicely since then.

Post: #189

Useful insights to the pitfalls and red flags inherent in over hyped and over bought Chinese company's stock:

http://bonnerandpartners.com/this-is-the...se-stocks/

Weekend Edition: This Is the “Canary in the Coal Mine” for Chinese Stocks

It could be the biggest stock blowup in the market since the 2008 crisis…

This company is twice the size of Enron at its peak ($100 billion). Pharmaceutical giant Valeant, which blew up in the last year, was only $90 billion at its peak.

Before I get to what the stock is, let me tell you where it is: China.

I recently heard an excellent presentation by Anne Stevenson-Yang at Grant’s Spring Investment conference. Stevenson-Yang is the cofounder of J Capital Research, based in Hong Kong. J Cap provides independent research on China’s stocks and its economy.

To understand China’s economy today, she said, think of Silicon Valley in 1999. You may recall that was one year before the tech bubble peaked, then collapsed.

The similarities between Silicon Valley (circa 1999) and China (from about 2006 on) are striking.

The one outlier is Alibaba. It generates a lot of operating cash. And yet, it still raises a similar amount of cash through financing activities.

Why? And where does all the money go?

Partly, the cash goes towards Alibaba’s rapidly growing pile of “dubious assets.” These include goodwill, intangible assets, and investments in equity investees. These assets produce no profits or sales for Alibaba. Often, these assets can be a source of future write-downs (losses).

Post: #190

(03-26-2016 07:35 PM)Brodiaga Wrote:  

(01-26-2016 09:44 PM)Brodiaga Wrote:  Those who are interested in backtesting, can do it here, for example. https://www.portfoliovisualizer.com/ It takes a few minutes to run a back test or a monte carlo simulation.

I just came across another good website for portfolio analysis and backtesting for those who invest in index funds.

http://portfoliocharts.com/

In particular, this portfolio looks interesting to me (there are similar charts for a number of recommended portfolios, including 100% total stock market).

http://portfoliocharts.com/portfolio/ric...core-four/

48% Total Stock Market
24% Total International
20% Total Bond Market
8% REIT

From the charts, you can clearly see that over time, portfolio returns revert to the mean. For this one, CAGR is 5.8% if you held it since 1972. Of course, past performance doesn't guarantee future results.



This is the same chart for a total US stock market portfolio (invest everything in a fund such as VTSMX if you use Vanguard).
http://portfoliocharts.com/portfolio/tot...ck-market/

In case you are interested in this guy, he started out as a poster over at the Permanent Portfolio forum:

http://gyroscopicinvesting.com/forum/oth...w-famous!/

Post: #191

Market Update # 12

I'm still on a buy signal ( that is, the market has an upward bias) but some of my indicators are getting more ‘neutral’ than outright positive, though not enough for the overall signal to not be a buy.

This is to be expected after a good run up, which we've had the past several weeks.

There’s a dearth of good stock set ups now (constructive patterns), which is also to be expected after a run up. I think this sideways action/correction we're about to (and currently) experiencing will build some constructive bases, i.e. chart patterns. ( for those who are technical investors)

We’ve had some distribution lately. Last Friday being the most notable, though the market did close in the upper end of its range on that day.

A pullback of 3 to 5 maybe as much as 7 pct would be very normal here.

A rare occurrence of note is now occurring that is indicative of a very good thrust in stocks. That is, the percentage of stocks on the NYSE above their 50 Day Moving Averages was recently over 90 pct. This has the potential to bode very well, especially after a correction has occurred in the markets, like we just had, in terms of a continuing advance/bull market

The last two times this happened was near the bottoms in 2009 and 2003. What followed after those two instances were very strong, multi-year bull markets for years in stocks. Let’s hope this repeats.

If you’ve missed this first leg up which has occurred in recent weeks, I believe you’ll have plenty of time in the next setup which is in the process of setting up now (with the correction/sideways action I spoke of).

Regarding sentiment among Investment Advisors, we seem to be in a complacent range for the advisor bearishness/bullishness. That is, Advisors and Investment bloggers are neither bullish nor bearish now, but in a neutral range overall.

I think we’ll have to see a strong movement in this sentiment one way or the other before a good movement begins.

*Stock Mention: Last week I mentioned MSFT looking good as it was breaking out and it was. I also mentioned earnings were coming out and to beware of that as often earnings dates can make a stop jump or fall hard. It was the latter. The stock took a big hit on disappointing earnings. This is why I mentioned the warning and why I, will rarely hold through earnings, unless I've already taken profits on a portion of my shares of that stock and/or have a good gain (cushion) in it already.


In summary:
* Not many stock 'setups' now ( if you're a chart pattern/ technical investor)
* Don’t force trades (let stocks 'setup')
* Maintain leaders
* Nail down good profits ( don't let 10 - 20% leaders fall back to break even. Consider taking some (or all) profits off the table and let the remainder ride. This is one big mistake of novice investors. They buy a good stock. It runs up 20 or 25 % and, they hold and it goes back to break even of below. If a stock goes up that much, sell half or more and let the rest ride ( with stops of course)
* Protect break-even points ( with stops)
* Adhere to stops

Post: #192

I want to say a big thank you for the guys dropping serious knowledge here. You clearly know far more than me about the stock market, but I'm hungry to learn.

I'm thinking to wait until the next crash where there is a 40-50% reduction in the price of the local index, then going all in. My reasoning is that within a 3-4 year time frame there's a high probability I can double my money (since markets are consistently cyclical). Whilst you can't time the market, preparing for an inevitable crash then piling in seems to be a rational strategy.

Am I being overly simplistic, or does this approach make sense?

Post: #193

^^

The problem is you could be waiting a long time for that to happen, and miss out on gains and dividends in the meantime.

Post: #194

Oil prices has been going up based on speculation, no real data to support the price increase of crude oil.

Been shorting oil at $45/bbl, we shall see...

Post: #195

(04-29-2016 03:01 PM)Scuba_Instructor Wrote:  Am I being overly simplistic, or does this approach make sense?

This type of market timing isn't necessarily such a hot idea because even legitimate experts get it wrong from time to time. It's better to ride out the draw downs and have a disciplined monthly or quarterly investment of your salary into a long term portfolio.

I'm not an expert but speaking from a personal investment point of view the only reason I pulled most of my stock portfolio is because I actually have an alternative that produces good returns business and investment wise. Plus i've been in the market since 2011 and rode most of the major bull up already. Being a bit overcautious doesn't hurt me much. Unless you have a similar alternative it's not advisable.

I'm still bearish about this market overall though. I think this recent bullishness has been a very strong countertrend rally of sorts. Seems more like a bull trap than a bear trap to me. The weakening of the nasdaq, missed earnings all over the place, continuing low treasury yield, and super high PE are all red flags in my book. This is the only thing I differ considerably from Robreke on but he's way more experienced with trading so..

The market is kind of stalling out with lots of contrarian signals being thrown out there. Economic weakness can be masked by fed words, money printing, and interest rate (in)action for a long time though. The fact that all these global central banks are colluding to pump the financial system and in turn the equities market should be a red flag that things aren't as good as it seems.

However even a strong countertrend can last for months before the market decides to make the next leg down. It's pulling back a little now but what that means for the long term trend still remains to be seen.

Post: #196

@Scuba_Instructor: Yes, it's a good idea, but as others ^ have mentioned, you could be waiting awhile for the drop to happen and miss out on gains. Also note that the local index may not need to suffer a arbitrary 40-50% drop, the crash might be 20, 25, 30 or some other number. You'll need to be able to judge/quantify what is a "crash". Lastly, the local index does not always go straight up, it could stagnate for years before going up. Are you able to accept opportunity cost? Some things to think about.

Post: #197

Thanks guys, the advice is much appreciated. I've learnt a lot from reading through this thread, so cheers for taking the time to respond to a market newbie.

The FTSE 100 and 250 (UK indices) seem to be both expensive and volatile right now. That said, there don't seem to be any asset classes in the UK that aren't expensive at present. I don't like the idea of missing out on any action, but the markets here don't seem to offer value right now.

To be honest, I've always held the assumption that the American indices were a better wealth-building tool than the UK ones (over here, property tends to be seen as the best way to make your cash).

Post: #198

(04-29-2016 10:53 PM)Scuba_Instructor Wrote:  Thanks guys, the advice is much appreciated. I've learnt a lot from reading through this thread, so cheers for taking the time to respond to a market newbie.

The FTSE 100 and 250 (UK indices) seem to be both expensive and volatile right now. That said, there don't seem to be any asset classes in the UK that aren't expensive at present. I don't like the idea of missing out on any action, but the markets here don't seem to offer value right now.

To be honest, I've always held the assumption that the American indices were a better wealth-building tool than the UK ones (over here, property tends to be seen as the best way to make your cash).

An etf like VTI or simply SPY is a good buy and hold if you want exposure to the U.S market but don't have access to direct U.S. mutual funds.

Investing in the U.K. index in the scheme of things is like investing in one small but mostly well managed company. You still want to diversify out as much as possible in the biggest and most robust economy for a long term portfolio. Not saying the U.K. will collapse or anything but its economic performance is beholden to a lot of regional issues. Its long term economic performance has a lot of drag from other parts of the E.U.

Post: #199

(04-29-2016 11:09 PM)El Chinito loco Wrote:  

(04-29-2016 10:53 PM)Scuba_Instructor Wrote:  Thanks guys, the advice is much appreciated. I've learnt a lot from reading through this thread, so cheers for taking the time to respond to a market newbie.

The FTSE 100 and 250 (UK indices) seem to be both expensive and volatile right now. That said, there don't seem to be any asset classes in the UK that aren't expensive at present. I don't like the idea of missing out on any action, but the markets here don't seem to offer value right now.

To be honest, I've always held the assumption that the American indices were a better wealth-building tool than the UK ones (over here, property tends to be seen as the best way to make your cash).

An etf like VTI or simply SPY is a good buy and hold if you want exposure to the U.S market but don't have access to direct U.S. mutual funds.

Investing in the U.K. index in the scheme of things is like investing in one small but mostly well managed company. You still want to diversify out as much as possible in the biggest and most robust economy for a long term portfolio. Not saying the U.K. will collapse or anything but its economic performance is beholden to a lot of regional issues. Its long term economic performance has a lot of drag from other parts of the E.U.

I'll go for some SPY, methinks - uncertainty around the UK leaving the EU (doubt it'll happen, but that's a discussion for the Brexit thread) is no doubt contributing to the market jitters we're getting over here.

Post: #200

Stock Market Update # 13


The correction continues this week, mild as it is. We’re in the first leg up off the big correction which ran from mid December until mid February. This is, I think, just a pullback within the first leg up off that big correction.

This is to be expected after that strong thrust we had off the big correction we had the first part of the year. In the below chart, the current pullback starts about 4/18:



I think this correction will be contained within the 4 to 8% range.

If you're an individual stock buyer using technical analysis, 50% or less invested is about right currently. Being 100% invested or , especially margined is, I think taking on undue risk and volatility until we have more stock set ups and a confirmed uptrend once again.

The nasdaq particularly (which is the above chart), has seen a rash of distribution days on this pullback.

There’s alot of ‘overhead supply’ on the nasdaq between 5100 and 5200, so that’s a common sense area to see the market run into some trouble in terms of breaking through and going higher.

So far, we’re down about 4% - 5% with the nasdaq falling back around the 50 Day moving average area ( a common sense area for the market to fall to during a temporary "digestion" correction )

The short term RSI ( a technical momentum indicator ), shows oversold. I’d like to see the recent distribution reverse and start to see accumulation days in the market (Up days on higher volume than previous days)

Last week, I mentioned over 90 pct of stocks over 50 DMA as a bullish long term sign. While it is bullish long term, it can be bearish short term, meaning we need that to cool off a little and the market needs to pull back before an advance can continue. We’re seeing that now.

In Summary:

- currently a 4% to 5% pullback
- RSI indicator is oversold. We will probably see prices on the indices catch up soon to what this indicator is showing us ( that is, prices will be oversold, not just momentum).
- Pullback contained to 8% at most (hopefully)
- Protect break-even points on stocks once you have an appreciable profit.
- Keep your stops in place.
- Caution against getting over zealous and buying many stocks until this little correction plays its course and setups occur in good names.