MrJohnRoss' Account Talk

[MrJohnRoss]

Looking at some charts tonight, and this one really caught my eye:




That is one massive white candle, and I think portends what could be a strong continuation rally to follow. As much as I would have liked to have been on board at yesterday's close, there's no way any system could have predicted the strength of today's move.

The only thing troubling about this chart is... yes, we could be "overbought". The RSI is now over 82, which is rare, and the PPO is also in rare high territory. So perhaps there may be limited upside potential in the next few days until prices rewind a bit in order to let the oscillators decompress.

The other chart that I found interesting was AGG, the bond fund:




I mentioned a few days ago that it looked like bonds might be forming a bottom, (and yields forming a top). It's sure looking like AGG might be getting a much needed reprieve, at long last. Bonds were deeply oversold on the RSI scale. It's good to see prices stabilize and begin to swing back higher.

The dollar continues to soften, which has helped the PM's and miners. WTIC continues to fall after hitting that upper resistance line. Wow, that's a tough nut to crack for oil prices.

Composite system is (of course) a solid +3. BPSPX and BPCOMPQ are both heading higher after their slight setback. Other internal indicators are looking positive as well. I'll keep my eye on short term indicators and report here if things change.

Good luck!

 

[FogSailing]

I was looking at the Dow last night MJR. I noted that historically when the highs for the MACD has gone to 150 and the RSI at 90, they have major pullbacks. So, the rally may still have momentum but are close to their MACD and RSI high water marks.

FS

 

[MrJohnRoss]

I was looking at the Dow last night MJR. I noted that historically when the highs for the MACD has gone to 150 and the RSI at 90, they have major pullbacks. So, the rally may still have momentum but are close to their MACD and RSI high water marks.

FS

FS, we're on the same page, no doubt.

 

[MrJohnRoss]

A quick look at Mr Tran:




The Trump rally has been rather phenomenal for Tran, up 13% since Nov 7. RSI is embedded overbought, and PPO is very high as well. There's been no weakness... yet... in the march higher.

One other thing to note, the market's PE ratio is now at a rather historic high of 25.84. This could be fine, as long as the "E" for stocks continue to climb along with stock prices. If not, there's gonna be trouble ahead.

Technically, my VIX system triggered a sell, but just barely, so my composite system is registering a +1, hold long.

Good luck!

 

[MrJohnRoss]

OPEC Doomed to Repeat History

"OPEC has two possible mechanisms for stabilizing the market. It can fix the price at which its members sell their oil, letting supply fluctuate, or it can fix the volume sold, letting the price settle where it will. It cannot set both at the same time.
OPEC has tried both; neither has worked for any length of time.... When it became apparent that fixing prices didn't work, OPEC opted for the system of output quotas it's trying to revive today. But cheating has been a persistent problem here too..."

 

[MrJohnRoss]

You would have thought that the rate hike was already "baked in", but the market certainly didn't act like it. Almost all the technical damage was done after the Fed announcement. It shouldn't have been a surprise to anyone. Go figure.

The PMO system that I use registered a technical sell signal today, just barely. With the VIX continuing to climb every day this week, it also remains on a sell. So the composite, technically, is at -1.

I'm very reluctant to move to cash at this point. I think this could be another whipsaw head-fake, and the market may very well head higher into the end of the year. Seasonality and the possible Santa Claus rally is playing a big factor.

Perhaps the market just went too far too fast, and just needs a little consolidation, which is certainly plausible. If market conditions deteriorate to the point where my composite registers a -3, I may re-consider.

The dollar soared, bonds plunged. Oil tanked. PM's and miners took a beating. Mr Tran is showing signs of topping.... Let's see how the next two days play out.

Good luck!

 

[MrJohnRoss]

It sure looks like the market has been "consolidating" rather than forming a short term top. The Dow, S&P, Nasdaq, and Mr Tran all looked strong today. Perhaps some of the big players are "distributing" as we reach 20K on the Dow, and I wouldn't blame them. With the P/E ratio at 26, it's a pricey market. 26 is all fine and good, as long as the "E" on the P/E ratio shows some improvements, and quickly. They say that no one rings a bell at market tops and bottoms, but Dow at 20K could be a short term bell ringer, just from a psychological stand point.

Never the less, I'm not going to fight the trend. My PMO system is negative (barely), but VIX is positive, as is PPO, so my composite remains at +1. We're now in the thick of the Santa Clause rally, so I certainly want to let dear Rudolph fly the sleigh higher. I'm keeping an eye on market internals, and there's been no major negative divergences. My cycle analysis still is looking like we should continue higher up to roughly Jan 16th, (give or take a day or two), and the S&P around 2300.

Good luck!

 

[jkenjohnson]

It sure looks like the market has been "consolidating" rather than forming a short term top. The Dow, S&P, Nasdaq, and Mr Tran all looked strong today. Perhaps some of the big players are "distributing" as we reach 20K on the Dow, and I wouldn't blame them. With the P/E ratio at 26, it's a pricey market. 26 is all fine and good, as long as the "E" on the P/E ratio shows some improvements, and quickly. They say that no one rings a bell at market tops and bottoms, but Dow at 20K could be a short term bell ringer, just from a psychological stand point.

Never the less, I'm not going to fight the trend. My PMO system is negative (barely), but VIX is positive, as is PPO, so my composite remains at +1. We're now in the thick of the Santa Clause rally, so I certainly want to let dear Rudolph fly the sleigh higher. I'm keeping an eye on market internals, and there's been no major negative divergences. My cycle analysis still is looking like we should continue higher up to roughly Jan 16th, (give or take a day or two), and the S&P around 2300.

Good luck!

Which PMO system do you use if you don't mind me asking?

 

[MrJohnRoss]

Which PMO system do you use if you don't mind me asking?

I use a combination of % PMO indicators for the S&P 500 with proprietary rules to determine the buy or sell signals.

 

[MrJohnRoss]

The Dow, S&P, and Nasdaq still look to be consolidating. Mr Tran, however, is looking weak at the moment:




Since Tran is usually a market leader, this could be another sign of market weakness. The things that impress me about this chart (that I don't see on the others) is the obvious negative PPO crossover, prices falling below the 20 DMA, and the Stoch falling through the 50 line, all bearish signs. Perhaps we're just unwinding from that overbought RSI area from last few weeks, which was certainly needed.

My PPO system just went negative today (just barely), so technically, we're now at -1. I'm actually surprised that my VIX system is so calm, and is the lone indicator still in a "buy" position.

The S Fund is looking even worse than Mr Tran right now. In any other market environment, I'd be moving to cash (and perhaps I should). But with seasonality so strong at this stage of the year, I just want to hang on a little longer to see if Santa is going to stage a come-back rally.

Good luck!

 

[MrJohnRoss]

My PPO system just went negative today (just barely), so technically, we're now at -1. I'm actually surprised that my VIX system is so calm, and is the lone indicator still in a "buy" position.

The S Fund is looking even worse than Mr Tran right now. In any other market environment, I'd be moving to cash (and perhaps I should). But with seasonality so strong at this stage of the year, I just want to hang on a little longer to see if Santa is going to stage a come-back rally.

Good luck!

Been a few days since I've had time to review charts and post. Yesterday my composite system went to a -3 full sell position, as my VIX system finally went negative. Even though my system has proven itself much smarter than me, I'm going to hang in there for another trading day, looking for a short term recovery from today's loss. Hope to hold into early January, but let's see how the next day or two go.

Good luck!

 

[DaddyTin]

Oh, the NEXT DAY card! Good luck, JR. I seem to have an infinite supply of those cards when I start playing them. If I add some discipline, I am sure I might keep a few in the bag and decide on fact rather than my emotion.

 

[MrJohnRoss]

Oh, the NEXT DAY card! Good luck, JR. I seem to have an infinite supply of those cards when I start playing them. If I add some discipline, I am sure I might keep a few in the bag and decide on fact rather than my emotion.

You may have hit the nail on the head, DaddyTin. The only logic to going against my system is the belief in Santa Claus and seasonality. That and $2 will get you a cup of coffee.

Since there's only three trading days left for the Santa effect (or is it affect; I never know which is correct), I was thinking there may not be much of a difference between selling now and three days from now. (Famous last words?)

I'm hoping to run an analysis on if I had followed my system to a T this year compared to buy & hold. Maybe over the New Year break.

 

[MrJohnRoss]

I ran the stats for 2016. Here are the results:

S&P Buy & Hold: +9.54% (Benchmark)

PPO System: +11.05% (17 buy & sell signals)

PMO System: +14.08% (21 buy & sell signals)

VIX System: +15.43% (45 buy & sell signals)

Composite System: +15.23% (24 buy & sell signals)

I was surprised to see these results. It's another confirmation that a mechanical timing system can beat the market, as long as you don't try to out-think it. Damned emotions. My last year's results were awful because of emotions and trying to out-think things. I vow to do better this year. Please hold me accountable.

Also, any of these systems (except the VIX) could be utilized for trading our TSP accounts, since we have (at least) 24 trades allowed per year. (One extra to go to cash after your 2nd IFT for the month).

Would love to do more analysis for the past 3 years, but it took me about 4 hours just to do this past year's data, and I still have a lot of "what if" questions that need further analysis.

I'll continue to post my composite signals here for your consideration, but keep in mind that these signals may not always beat the market in any given year.

Good luck to all in 2017!

MJR

 

[DreamboatAnnie]

Hello Mr. John Ross,

Are you running the PMO and PPO indicators on SPX and DWCPF and use standard defaults to generate the signals? Just curious about that. I use the MACD instead of PPO but this year had been leaning more towards using EMA cross overs to generate signals although I did not execute as I should have. Letting too many other things and thoughts get in the way.... so I can relate. I've resolved to refocus and try to do better. I guess we all are doing that as the year starts.

Just want you to know I really enjoy reading your posts so THANK YOU !!! Great info. Best wishes to you on your Investments !!!!! :smile:

 

[MrJohnRoss]

Hello Mr. John Ross,

Are you running the PMO and PPO indicators on SPX and DWCPF and use standard defaults to generate the signals? Just curious about that. I use the MACD instead of PPO but this year had been leaning more towards using EMA cross overs to generate signals although I did not execute as I should have. Letting too many other things and thoughts get in the way.... so I can relate. I've resolved to refocus and try to do better. I guess we all are doing that as the year starts.

Just want you to know I really enjoy reading your posts so THANK YOU !!! Great info. Best wishes to you on your Investments !!!!! :smile:

Thanks DBA. I use indicators on SPX and VIX that are standard, although my PMO system is a bit more complex, using %PMO crossovers at certain thresholds on the SPX.

Best of luck to you this year!

MJR

 

[pmaloney]

Happy New Year and thanks for all your wonderful and thoughtful posts! :smile:

 

[MrJohnRoss]

Happy New Year and thanks for all your wonderful and thoughtful posts! :smile:

Thank you pmaloney. Best of luck to you this year as well!

 

[MrJohnRoss]

The first two trading days of 2017 have been good enough to put me back in sync with my composite system. Both the VIX and PMO are at +1, while the PPO remains at -1, so my composite now reads +1.

I'm hoping we still have a solid week and a half of bullish behavior before this cycle ends. Currently, 77% of S&P 500 large cap stocks are above their 20 DMA, while mid caps and small caps are doing even better at 86% and 84% respectively.

Bullish percent index (BPI) for the S&P is at 71%, while the BPI for the Nasdaq is reading 66%, both very strong right now. The advances vs declines and new highs vs new lows are also tracking higher.

Interesting to see bonds starting to make a breakout move higher. 10 year Treasury yields have fallen from 2.62% to 2.45%, and look to fall further. Not sure yet if the PM rally is for real. I'm watching that one closely, which is tied to the dollar.

Let's keep the bull train going! Good luck!

 

[MrJohnRoss]

Been watching market internals weaken the last few trading days. This advance looks to be on shaky legs. Mr Tran, usually a market leader, has not confirmed this latest move higher by the Dow, S&P and Nasdaq, so we've also got that divergence.

The talking heads say it has to do with the drop in the price in oil. Perhaps, but in any case, my composite system has turned around and now reads a -1 sell. Interestingly, my VIX system, usually the first system to register market turns, remains at +1.

I was hoping to see this rally last through this week, but it just wasn't meant to be. Rather than go to the safety of the money market, I'm going to roll the dice and see if bonds can continue their rally.

100% F Fund as of C.O.B. 1/10/2017.