InsaneZane1's Account Talk

[InsaneZane1]

Mild to moderate gains in all indexes this morning.

S&P Dow Jones Indices » Dow Jones Total Stock Market Indices » Overview

Micros and Growth stocks are weakest, which tells me the gains we are seeing this morning are possibly more of a weak, dead cat bounce then the start of the next leg up. I'd rather my own account head north again, but I still think the 10-day averages would be a good time for people who are sitting on the sidelines to target for entry points.

Jobs report = 230K actual vs 220K estimate = good news
ISM Services = 57.1 = "okay" (not bad at all, but not great either)

Looks like healthcare and geopolitics (fear of ISIS, ebola, etc.) caused consumers to close their wallets a bit. Considering that, the result seems to be artificially low. I would expect that next month's report will be better, barring additional bad news/concerns.

Don't get me wrong. I'm a fundamentals/technicals investor, and the fundamentals (earnings reports) alone give good reason to expect higher share prices over the next quarter. But the technicals half of me says it's not yet an ideal time to move back in just yet.

 

[JamesE]

Always appreciated Z, glad to see you posting again.

 

[InsaneZane1]

I definitely can't keep up with what everybody else is posting on a regular basis, but I'll definitely do what I can to keep those of you who are interested apprised of my own thoughts.

With that said:
Most earnings reports have been good and economic reports have also been reasonably good, yet the markets don't seem to be reacting as strongly to the news as I would expect. The C Fund's RSI is also at 65. Adding to this, there seems to be a bit much uncertainty over which way the ECB is going to go. The I Fund hasn't responded as positively to last week's Bank of Japan action as many might have expected. In fact, jumping in on that move has actually cost me a bit over the last week.

There may be some room for more gains in the US markets still, but I decided to do an IFT just now as an insurance measure.

Old: 25G/10C/15S/50I
New: 70G/10C/15S/5I

 

[InsaneZane1]

S&P Dow Jones Indices » Dow Jones Total Stock Market Indices » Overview

Micros are continuing to lag, and now the strength today is in value stocks across the board. Each trading day seems to be alternating between value stocks and growth stocks. Small caps are still generally doing better than Large caps, so I'm inclined to believe this run will continue north a short while longer before consolidating a bit. Not enough room for gains and too much risk of a pull-back to move heavily into C/S/I if you ask me.

 

[InsaneZane1]

Friday's close was lower than I expected. In fact, it hit all of my primary "Buy" targets - price at 50D average, RSI < 40, and Histogram < -0.05. This morning's open looked like it was going up, but it's now looking more like that was a result of European investors buying our dip, followed by US investors continuing the sell-off.

I went ahead and IFT'd to 70C/30S this morning despite having an interest in finding out how and when Russia will adjust to the low crude oil prices.

Russia

According to the above info from April, 58% of Russia's exports are mineral fuels/oils. As a result, the still falling price of WTI is certainly going to cut into Russia's oil exports market share. I believe most of the selling last week was related to fear over how Russia will handle this problem. This is just fear-based selling that we've been seeing though. All fundamentals have solid, bull market leanings. Therefore, the time appears to be just right for me to go all in from 75G/10C/15S/5I to 70C/30S now. As much as I favor making somewhat regular IFTs based on market conditions, there's no reason to risk missing out on a potential 3.5% gain back to the previous high by waiting too long to get back in. It's better to take another potential 2%+ drop now to have a great chance at a 3-5% overall gain than sit on the sidelines too long and risk having a rebound leave me behind.

 

[InsaneZane1]

VIX is pretty high already, but its ADX suggests that it could go higher still before it's ready to drop.


It's amazing that the S&P can get to +0.8% after the markets opened, only to fall to -0.8% now. Falling crude oil price seems to be factoring into it again.


I'm not so sure about the S Fund's prospect though. Although it isn't always the case, share prices are most likely to rebound when its ADX gets above 40 (often 45-50). At the moment, DWCPF's ADX is very low. I've seen rebounds with low ADX readings, but most prominent rebounds happen when it's high and prices are more likely to fall when it's low.


I sure hope my IFT is well-timed. WTI is going to be a wild card though. The more its price drops, the more it's going to freak out the fear mongers. The sad thing about that is, low oil prices should be great news for domestic markets. Just about everybody but oil companies should be benefiting from these low prices. To add to this, commodity prices are all low, so raw materials are cheap to not only buy, but also to transport to refineries. Factories/manufacturers benefit from lower transportation and material costs. Sellers benefit from same. Consumers benefit from same, which translates to more people able to spend their money, not to mention those already spending money having more of it to spend on other things.

 

[InsaneZane1]

S&P/C Fund quietly accelerated from a flat morning to a moderate gain to a new high. This is typically a point where one group starts to peel back their risk exposure. I'm not part of that group this time though. We've had a lot of good, fundamental-driven reports over the last month, and low oil prices should be helping matters overall. The VIX is also working its way back down still, so there is no reason for me to believe this rally will be ending here. To the contrary, the C Fund's RSI would need to climb all the way to about $28.19 before it hits the magic "70" level. That share price is consistent with the C Fund's Fib-161.8 extension, and is still 2.8% above the current price. Translating this over to the S&P gives us a target value of 2138. As long as investors don't start to get freaked out about news, I intend to stay 70C/30S until roughly that level (assuming it gets there before the next dip). I'll expect some holiday volatility, but overall...I think this Santa Claus rally still has the momentum to get us near my S&P 2138 target.

 

[InsaneZane1]

I'm tinkering with a new system to help determine targets at which to increase or decrease risk. The system involves daily target revisions, so the first target seen will definitely not be a solid entry/exit point for me.

After a mildly positive close today, my revised targets are:

S&P - 2134 (was 2138) - 2.49% above current price
C Fund - $28.15 (was $28.19) - 2.50% above current price

 

[InsaneZane1]

IFT'd to 100F this morning.

Conditions that affect the F Fund make it ripe for a bounce. Between that and the fact the equity funds should be hitting resistance at the hands of Eurasia and it now being in the back half of a short month, it's now more reasonable to use IFT #2 for the month on a move into the F Fund. This would seem ideal regardless of which fund(s) I would have otherwise been in.