Today in the market, Tuesday, June 02, 2009: Following yesterday’s impressive rally today saw choppy, but positive action. All the major indices ended flat to slightly higher.
Before I go into RSI’s picks for today, I want to spend a moment on Evidence Based Technical Analysis, which I refer to as EBTA. If we put on our scientist’s hat and look at traditional technical analysis with a degree of skepticism in the manner that scientists look at astrology, as an example. What do we find? We find a lot of baloney akin to the snake oil salesman pitch. And the key is look out for the “it’s an art and not a science” excuse that is the sure warning sign for non-evidence based claims. EBTA requires specific, testable rules based methodology that provides results that perform better than random chance. This is a tough proposition indeed. My goal is to insure RSI’s results have potential performance better than chance; another tough proposition.
ETF/CEF Low Volatility:
- IPE – SPDR Lehman Barclays Capital TIPS
- TIP – iShares Barclays TIPS Bond Fund
ETF/CEF Medium Volatility:
- MIN – MFS Intermediate Incm
ETF/CEF High Volatility:
- USA – Liberty All Star Eqty Fund
ETF/CEF Discussion: Today’s choppy market caused RSI to retreat to picking some conservative funds which include two closed end funds (CEFs) which are MIN and USA. Both have good yields and reasonable expense ratios. USA trades at a huge discount to NAV of -22%! This could be a profitable opportunity or a trap or its discount could indefinitely. The price action looks okay, so take a look yourself.
The Chainsaw Pick: Yesterday I mentioned SRS for a potential short play. I failed to mention that I was looking for it to fall to under $17.79 before its expected rise. So if you are looking for some excitement you might monitor SRS.
For full disclosure I have a position in TIP. Again remember, please do your homework and you decide. RSI just makes suggestions.
