From Goggle Images

_________________

KISS & Stocks

(Keep It Simple Stupid)

If you don’t understand a term look in up at Investopedia.com dictionary

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

DOUBLE CHECK ALL DATA, I MAKE MORE THAN GRAMMAR MISTAKES

Index Percentage Volume
Dow +2.26% low
NASDQ +3.32% low
S&P 500 +2.83% low
Russell 2000 +4.75% -

_______________

Technicals, Fundamentals & HFT’s

Shorter Term Outlook.

day/days/week

  • Second huge rally day. This time not just low volume, but ultra low volume. Clearly High Frequency Trader’s algorithms dominate the trade. Let’s take a look at some patterns/characteristics of HFT’s
  1. HFT’s are made up of uber wealthy investors/entities
  2. They  make money off of volatility – Major swings in the market will, therefore, become more common.
  3. They win far more than they loose. – Non HFT’s lose
  4. They manipulate through leverage and size.
  5. They use sophisticated algorithms.
  6. They can act far faster than any traditional investor.
  7. They dominate trading with 60+ % of the trade. Sometimes much higher.
  8. They create added volume to market moves both higher and lower.
  9. If you can predict collectively what HFT’s are going to do you would be a very rich person
  • Technically we have formed a double bottom for most major indexes Now major indexes have formed short term higher highs. (see charts of major indexes on right side of blog). Traditional technical analysis says this is bullish. Of Course traditional technical analysis does not account for HFT’s.
  • The McClellan Oscillator (MO) rose  to +74.63 (Rough estimates =-30 somewhat oversold, -60 oversold, -90 OMG oversold)( +30 somewhat overbought, +60 overbought and +90 OMG overbought) We have officially entered oversold territory. At the start of July stocks made it all the way to over +80 before they melted down. In the last two year last August was the only other time the MO made it to a bit over +80. Some other overbought/oversold indicators I look at ( LINK -MADC, Stochastics, RSI and you can change chart at link to look at 32 others) are not as overbought as the MO. But the MO has served us well in the HFT dominated US stock market. MO showing oversold outlook for stocks = Bearish
  • Reading the Tea Leaves –  There are major problems next month especially in the EU. Many analysts are confused. YOU shouldn’t be confused and realize this is all HFT manipulation. While there is huge momentum with bulls, the HFT’s have had problems in the past getting above @+85 on the MO. So we are much closer to a short term high.

Longer Term Outlook

weeks, month, months

  • Repeat - May 20th forecast still stands. The May 20th summer forecast has come to pass and now we wait to see the Fed’s next move. Add to this Europe is a whole lot worse than previously thought back in May.
  • Reading Tea Leaves – From yesterday -  Let’s see how far the HFT’s can take stocks into overbought territory before yielding to bears. The MO shows any significant move higher is going to be hard.(see above) There are major problems next month especially in the EU.  Wall Street wants more Fed liquidity and they are not going to get it unless stocks fall.
  • From YesterdayTechnically,  we’ve put in a double bottom and that could sustain a low for a while. Since many traditional investors have long since stop investing, HFT’s do dominate/control trading and they make their money off the markets moving – The bigger the move the better.
  • Reading Tea Leaves – The HFT may have busted most of the short positions out there – Lots of people thought markets were going down so they went short. They had to buy to cover their shorts and not lose too much $$$. Best read is, for the time being, they have run out of shorts positions to take advantage of. (sorry I know this may be too technical)

________________

Paul’s Corner

Here are YSL 5 stats for Aug 29, 2011
.
Relative strength LINK
Technical data, Excel SS LINK


Last week a comment was made  essentially suggesting products such as HGSI weren’t worth anything.  Maybe spending $2 a day is a bit rich, but consider HGSI handed out glaring sell warnings prior to the slaughter back in 2008. Heeding those warnings my 401K was moved into cash and I enjoyed watching the decline of the market and I didn’t lose a cent. Recently back on July 27, HGSI gave me a clear sell signal, which I moved most of my money again to cash. I did play a few hands since, I won a few and got slapped for a few, but mostly I’m unscathed. If one doesn’t see the need of an analysis program, or even using a product such as Investors business Daily, a box of Darts from Walmart and a copy of the Wall Street Journal is probably all you need.


My usual disclaimer applies.

______________

Current Positions

Below – Investors411  hypothetical portfolio that should outperform the S&P 500.

See POSITIONS Section of blog for more on YSL#5.(scroll to bottom)

_____________

Strategy has always been to buy the dip in a bullish trend. Most stocks sure as hell are not dipping now. But stocks have started to trend higher.

NLYAnnaly Capital Mgt. Ultra high dividend stock – So far NLY has held up reasonably well through current stock market slide.  and 14% dividend is added bonus.

I still have a Put position to protect NLY. (strike price $17.00 for 3rd Friday in Sept) Also puts on other dividend stocks.

GLD – (Long Gold ETF)  Bought at 167.05 last week – a half position. GLD closed yesterday at 173.89. 3% stop/loss on GLD.

Disclaimer Personally I own  a group of dividend stocks including NLY, SNH, KMP, MO, HTD, T, ABV & AGNC and a few other smaller positions I have puts on about half of dividend stocks I own. I buy everything in the hypothetical Investors411 portfolio. I’ve  also  SDS & TZA (ETF’s that double and triple short the market) as hedges. I will be purchasing additional YSL #5 stocks when we have a lower MO.

_______________

Long Term Outlook (for US stocks)

Since we have, technically created a double bottom and reached a higher high on the charts of the major indexes (see charts on right side of blog) the outlook is changed to NEUTRAL. We are on the cusp of change so things can switch back and forth between CAUTIOUSLY BEARISH & NEUTRAL for a while

NEUTRAL*

*Investors411 has 5 different long term valuations - BULLISH, CAUTIOUSLY BULLISH, NEUTRAL, CAUTIOUSLY BEARISH, and BEARISH.

* Everything written in BROWN is a repeat from a previous day

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK AND POTENTIAL LOSS OF PRINCIPLE

  • Share/Save/Bookmark