Cortez's Account Talk

[Cortez]

I am entering 2006 with 60%C and 40%S. My strategy is to make my entries and exits based on trend channels and relevant DMAs. I exit when the relevant DMA (usually 50 but 20 in certain situations, such as at clear resistance levels) is broken at the CLOSE (the close instead of guessing at Noon saved me from bailing C & S on Tuesday Jan 3rd). I look to enter when the price action is at the bottom of the trading channel and the death of equities is being proclaimed once again and I see that the price action stabilizes at a prior level of support. I like to pick my entry based on a two-year S&P weekly chart and use the S&P weekly chart in conjunction with the respective fund chart at 6 months daily for exits.

 

[cowboy]

I am entering 2006 with 60%C and 40%S. My strategy is to make my entries and exits based on trend channels and relevant DMAs. I exit when the relevant DMA (usually 50 but 20 in certain situations, such as at clear resistance levels) is broken at the CLOSE (the close instead of guessing at Noon saved me from bailing C & S on Tuesday Jan 3rd). I look to enter when the price action is at the bottom of the trading channel and the death of equities is being proclaimed once again and I see that the price action stabilizes at a prior level of support. I like to pick my entry based on a two-year S&P weekly chart and use the S&P weekly chart in conjunction with the respective fund chart at 6 months daily for exits.

Mmmm? Interesting!! I hope it works for ya! I'll be watching.

 

[Cortez]

I will be watching Thursday's close and Friday a.m. action closely. If the markets are showing a lack of momentum to the upside I will be looking to go to the G fund and await the pullback to support. As Tom noted in his newsletter, every attempt to break long range resistance trends over the past two years has failed. The pullback I anticipate should be shallower than the one from October. S&P 1200-1215 area. Also take note of a divergence in the Advance/Decline indicator. S&P has a new swing high but the A/D failed to have a new swing high. Negative Divergence.

 

[Cortez]

11,000 is selling zone not entry point

5 year chart of DOW shows repeat failure around the 11,000 mark. Be wary of the scam artists on CNBC. Time to be thinking exit not entry. Currently 60C 40S but watching for a top to develop this week.

http://www.billcara.com/archives/2006/01/dow_11000_does.html#more

 

[Cortez]

Market momentum slowing down but looks to be enter a period of sideways trading as opposed to a reversal.... so far. Market is bringing in the buyers. Of course DOW 11,000 on CNBC and the front page of most every newspaper will attact the herd. Holding 60C 40S.

 

[Birchtree]

Cheapshot life line

Cortez,

I noticed the diversification - more guts than I got. Just wondered how heavy the 1% G life line was. Perhaps he'll peel off profits all the way up provided the up direction continues - would seem reasonable. Could have been more programs on the buy side today - watch the fireworks when the 5000 or so hedge funds step up to big Casey. Nikkei is back after a small rest. The diversification is in reference to Cheapshot. You are also in good position - we may have to just drag you along kicking and screaming. Take care.

Dennis

 

[Cortez]

You wouldn't want to gamble and go 100%I as that would not be prudent risk management. I am not personally a bull or a bear, although my overall outlook by the end of this year is for the market to be down. The trend is up, so I will ride it. Trying to predict the top isn't wise - it would be akin to jumping in front of a speeding rocket. But when this rocket runs out of fuel - it's a long way back to earth. What's your general outlook?

Shawn

 

[Birchtree]

Indecision

Cortez,

I can't decide if it's 1995 or 2003 - but I'm in the wave 3 center point camp. We may have a long way to go but if we get passed Dow 11,722 I'm going to buy myself into happiness. A lot of folks seem to think a major buying opportunity will be available later in 2006 - that could come after the market hits bottom sometime in the second or third quarter - I'm not waiting. Too much good value at current prices - the C fund will outperform. I have some concerns about the I fund that I will post on my account talk. See ya!

Dennis

 

[Cortez]

Not betting on Retail

IFT to 100%G effective EOD Thurs Jan. 12. This well could be a one day step aside. Basically my thought is that I do not want to risk my gains this year on the release of Retail Sales and PPI out on Friday morn. By 11:30 am EST I will be able to gauge the market reaction to the numbers and either reenter the market or stay in cash.

 

[Cortez]

Pullback in the works?

Staying out of the markets at least another day or so. The indices appear to be curling over. Pullback in the works. Expecting SPX to test 1275 level of support. If it holds I'm back in 50C 50S. Currently 100G.

 

[CheapShot]

I Fund

I like the I fund, but I also like to gamble, but I follow it through the dollar, when I feel the dollar is on a down trend, I will load up on the I Fund I won't unload it daily like I did last year. I wish I stayed in it all of last year, but moved my money around to much, unfortunately I don't know how much more the Euro can grow vs Dollar, but I do feel the Yen and the rest of Asia will climb vs dollar, but the I Fund is top heavy in Europe, I don't see the I fund producing like it did last year. I think it will rise long term but not like it did this year, based more on a hunch then anything I have actually read. My two pence worth.

 

[Cortez]

Downtrend established

Staying 100%G. I'm not smart enough to pick bottoms or talented enough to catch fallin' knives. Today's action while not negative is a sign that there is more weakness to come given that the morning rally failed at the 7-8 day downtrend line and drifted along that line lower for the afternoon. This downdtrend line can best be seen looking at a 1 month / 1 hour chart of the SPX or DOW. When this line is broken with strength for a second day I will go back into the stock funds.

 

[Cortez]

Stocks in S&P500 above 50 day MA

A good leading indicator of broad movement in the S&P500. see attachment.

 

[Cortez]

Updated Chart EOD 1/24

The SPX stocks above their 50 day moving average continues to decline. Remaining 100G. Any attempt to catch a short term bounce will likely end in a loss before your IFT is effective as the market is determined to try the downside.

 

[Cortez]

Scaling back into stocks. 50%G, 25%C, 25%S EOD 1/26. Market appears ready for a short term retest of Jan highs. Still intermediate term bearish.

 

[Cortez]

Sell when everyone is buying

Major market averages are all at or near their descending downtrend line drawn through the recent highs. Exiting CSI and going 100% G until averages fall to support level or a breakout from the downtrend line is evident.

 

[Tspgirl]

Straigten up and fly right

Hi,
I am embarrassed to say I have not ever followed the market as closely as Cortez and Rod among others. I am new, new, new to this, but am ready to to face the funds and start conquering.

Don't laugh when you see my distibutions--just please help me get in line with the times, ok?

G-20; F-18; C-58; L2040-2.66

I am feeling fairly aggressive, (very) short term goals are college bound kids, long term retirement (20+ years).

After the snickers, any lifelines out there?

Holding my head up high,
Tspgirl

 

[rokid]

Unless you like to gamble against the house, go 100% L 2040 Fund and keep it there until you retire.

 

[Birchtree]

I can't resist

Go 75% C fund and 25% I fund for the next three years and don't worry about all the volatility - you are not vulnerable. Allocate your current distributioins the same way. Let dollar cost averaging show you the way.

Dennis

 

[rokid]

Go 75% C fund and 25% I fund for the next three years and don't worry about all the volatility - you are not vulnerable.

TSPGirl,

Only you know whether or not you are vulnerable. Based on historical returns:

L 2040 fund - 10.1% annual return with a 95% chance that your returns will fall in the range of +38.5% and -18.1%. Could you stand losing 18% of your money in one year?

75% C and 25% I - 10.8% annual return with a 95% chance that your returns will fall in the range of 44.6% and -23%. Again, could you stand to lose 23% of your retirement in one year without panicking? I don't know if I could.

Both these portfolios are risky. However, the L2040 offers the advantage of being invested in all 5 funds. Consequently, whichever fund does the best, you'll have a piece of the action. I'd say there's at least a one in three chance that the S Fund will offer superior returns to the C & I funds over the next three years.

Another portfolio evaluation criteria is to select the portfolio with the highest Sharpe Ratio. Essentially, the Sharpe Ratio is a way of quantifying how much return you get for each extra unit of risk. The Sharpe Ratio for the L 2040 fund is .40. The Sharpe Ratio for the suggested 75/25, C/I fund portfolio is .43.

If the L 2040 fund is too risky, try the L 2030 fund.

Incidentally, the L 2040 fund would have returned 7.9% last year. The proposed 75/25 allocation returned 6.3%.

Finally, this thread contains a list of the top returns from last year. The L2040 fund is number nine on the list.

http://www.tsptalk.com/mb/showthread.php?t=2542