KEEPING YOUR EYE ON THE PRIZE - December 30, 2009
Posted by Marlowe Cassetti in NVDA.add a comment
Stocks ended the next-to-last day of 2009 little changed as welcome news on manufacturing helped offset a drop in commodities prices.
The market drew support Wednesday from a key economic indicator that signaled growth in the Midwest manufacturing industry for a third straight month. The Chicago Purchasing Managers Index rose to 60 in December from 56.1 in November. The report showed that production and new orders increased and employment improved. (commentary & photo courtesy of AP)
Needless to say, my friend Jack is ecstatic about my “tip” of buying NVDA. It has done quite well since yesterday morning’s market opening and since I too bought it I’m pleased as well. As I have stated in previous blogs, you have to operate with your long-term goals as your objective concern. A two day gain in a stock isn’t what it is all about. From what he has told me, but Jack has taken a bath in some of his stock ventures. He really doesn’t have a systematic trading plan with a sound methodology. He is too focused on “action”, the buying and selling. He calls it “juice”. It is like the excitement folks get at the race track. I’ve discussed this with him and he recognizes all this, but he craves the juice. I, on the other hand, try to be indifferent to the gains and the losses as long as I know that it is leading me on the right path. To me it is all about .. keeping your eye on the prize.
Recently I’ve been looking at the problem of too many choices. Here is the situation…in March of this year RSI generated a boat load of picks, a virtual deluge. Way more than one could handle within the hypothetical portfolio. The Turtle Trading way is to spread the buys over the correlation spectrum to maintain some semblance of diversification. Easy to say, but hard to model.
RSI had no new picks today.
Tomorrow is New Year’s Eve and the stock market will be open all day .. no abbreviated session. This is the last trading day of the year and it should be a yawner. I won’t publish a blog tomorrow night, but there will be a posting sometime before the market opening on Monday. I hope to have a year end RSI wrap-up that summarizes its hypothetical holdings.
Until then, have a very Happy & Prosperous New Year. Let’s make 2010 the best year of our life.
CONFESSIONS OF A STOCK OPERATOR – BOUGHT NVIDIA Corporation (NVDA) December 29, 2009
Posted by Marlowe Cassetti in GLD, NVDA.add a comment
What is the old adage? ….. Do as I say, not as I do. Anyway, it is a long story, but I do occasionally run RSI on the S&P500 stocks and feed the results to Jack** who will only invest in stocks. Last night NVDA popped up on the screen and I shot off a message to Jack. He quickly replied with a long list of fundamental reasons as to why he will buy NVDA. It got me thinking, I got caught up in his enthusiasm and this morning I took a position in this stock too. Too bad I waited a while because I could have bought it $0.10 cheaper at the opening. There is another old adage … He who hesitates is lost.
NVDA volatility is 8.14% and it gained a nice 1.24% today on decent volume for this slow week. I set my stop loss at $16.68. I’m looking for some continued good performance…..for Jack’s sake, of course.
After the close today there were no RSI picks. Catch you tomorrow.
** FYI – Jack, not his real name, abhors ETFs. He claims they are for the unwashed masses. How can Jack bring himself to brag about an ETF at a cocktail party? It makes sense in a perverse way, but I point out to Jack that billionaire hedge fund manager John Paulson bought a huge position in the gold ETF GLD. Go figure.
LEVERAGED ETFs? December 28, 2009
Posted by Marlowe Cassetti in Blogroll.2 comments
Better holiday sales and rising commodities prices pushed stocks to their sixth straight gain and new highs for 2009.
Major indexes edged higher in light trading Monday after sales figures showed shoppers spent more freely this holiday season, a sign that consumers are feeling better about the economy. (commentary & photo courtesy of AP)
Leveraged Funds? The ETF universe has been growing by leaps and bounds. It is covering new sectors and themes almost every week, or so it seems. However, the RSI system operates on a narrower universe than the 800 plus ETFs. This universe has the largest 400 or so funds exclusive of the leveraged products. Through objective testing I have found that excluding these leveraged ETFs helps RSI’s overall performance. That is just the nature of the beast. On the other hand, RSIx operates on a smaller universe of equally balanced long and short funds and its performance is enhanced by including 2x or ultra leveraged ETFs, but not 3x leverage. Go figure??? What does all this mean? Well, under this strategy you will not see RSI issue ETF picks in the category of leveraged funds. On the other hand, if RSIx issues a pick it is probable it will be a 2x or ultra fund, long or short.
Okay then, the “take away” from all of this is that there are two baskets of ETFs that RSI evaluates at the end of each trading day. And the basket depends on the trading module in operation.
I have mixed feelings about buying and/or selling these last two weeks in this month. The market and the players are in a sleeping stupor for these two weeks. With that said, the RSI methodology issues buy and sell signals throughout the year. There is nothing in the system that says “avoid the last two weeks in December”. Therefore, I have to take the trades regardless of the month or season. That is the discipline that goes with trading a mechanical system.
RSI had no ETF picks today.
CHRISTMAS EVE – PROFIT TARGET HIT United States Natural Gas (UNG) December 24, 2009
Posted by Marlowe Cassetti in UNG.add a comment
Stocks ended a holiday-shortened session Thursday at new highs for the year following upbeat reports on unemployment and durable goods orders.
A weaker dollar also helped buoy the market, lifting energy and materials stocks. Christmas Eve trading was extremely light.
The encouraging signs of the labor market and consumer demand helped assuage investors who were disappointed the day before by an unexpected plunge in new home sales last month. (commentary & photo courtesy of AP)
On this shortened trading day my profit target was hit and my position was sold in United States Natural Gas (UNG). Strangely its price kicked up at the opening, hit my price of $12.80, only to selloff the rest of the day. It was a good ride while it lasted and it netted a nice profit of 18% in a little over a five weeks. Not too shabby. My major problem is that RSI’s picks come in small doses, except when the market moves big, such as this past March.
Have a Merry Christmas. Catch you after the market closes next Monday.
DELAYED BUY – iShares Dow Jones US Home Construction (ITB) December 23, 2009
Posted by Marlowe Cassetti in ITB.add a comment
Stocks ended an erratic session with a slender gain Wednesday as rising commodities prices offset disappointment over an unexpected drop in home sales.
![[abreastwallstre]](http://s.wsj.net/public/resources/images/OB-FD185_abreas_D_20091220154111.jpg)
Gains in commodities drove the shares of energy and materials-producing companies higher, lending support to the overall stock market. Gold, oil and other commodities rose as the dollar dropped.
The dollar snapped a four-day winning streak as the latest economic data reinforced investors’ belief that the recovery will be slow. (commentary courtesy of AP)
My stock watch generated a delayed buy of iShares Dow Jones US Home Construction (ITB). What do I mean by a "delayed buy"? Actually, the RSI operational system generated a buy of ITB months ago, July 30, 2009 to be exact. Since I didn’t have this version of RSI operational in late July, I didn’t have the opportunity to buy it at that time. However, since it hadn’t gone anywhere since the recommendation I decided to monitor it for a breakout. The trigger went off today and I bought at a price of $12.14. No, this is not the RSI system methodology but rather a wild hair. Somewhere there is a rationale but I’ll spare you the excuses, I mean details.
Anyhow, although ITB has gone nowhere it does look as if it is poised to move upward. We shall see.
FYI – My stop loss level is set at $0.82 below my fill price.
As I mentioned in my blog several weeks ago concerning “holding position” funds, I sold the appropriate number of shares to cover the cost of my anticipated purchase and then seconds later bought ITB. I was pleased to have made this maneuver quite seamlessly and it is now in my trading playbook.
Catch you later after the market closes.
A NICE UP DAY BUT NO NEW PICKS TODAY December 22, 2009
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Stocks pushed higher for a third straight day after a surprisingly strong report on housing provided the latest evidence that the economy is picking up speed.
All major indexes gained less than 1 percent Tuesday, with the Standard & Poor’s 500 index and the Nasdaq composite index closing at new highs for the year. The Dow Jones industrial average rose 50 points, bringing its three-day point gain to 156. (commentary and photo courtesy of AP)
Okay, so we have a nice up day in the market and maybe a continuation along this path will lead to a resumption of the bull move that started in March of this year. We shall know the answer in the fullness of time. Until then I will be waiting for RSI to lead my investment decisions.
Catch you tomorrow.
A LOST DECADE – A WAY AHEAD? December 21, 2009
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Another wave of corporate dealmaking stoked investors’ confidence in the economy and carried stocks sharply higher Monday.
Analyst upgrades of Alcoa Inc. and Intel Corp. and positive momentum on President Obama’s health care overhaul also helped drive a broad advance on the stock market. Major indexes closed off their highs of the day but still rose about 1 percent. The Dow Jones industrial average jumped into the black for the month.
Bond prices tumbled as stocks rose, pushing the yield on the benchmark 10-year Treasury note up to its highest level since August. The dollar strengthened, hurting commodities prices.(commentary & photo courtesy of AP)
The Wall Street Journal calls the current decade the “Lost Decade” since it has been the most dismal decade ever for the stock market. Even the 1930s were better. With that sobering statistic in mind, how do we plan for the future? Surely the next decade, which we are about to enter, will be better. Statistical history says, yes it will be, but I suspect we are in for a rough ride. The “Way Ahead” will be fraught with dangers and opportunities. I somehow feel confident that a systematic, objective trading/investing methodology, such as RSI, will be the guiding light to The Way Ahead.
No new RSI picks today. Catch you tomorrow.
WEEKEND NOTE December 18, 2009
Posted by Marlowe Cassetti in Blogroll.add a comment
The stock market broke a three-day slide as two big technology companies signaled that business was improving, raising hopes about business spending.
Tech stocks led the market higher in choppy trading Friday. Software company Oracle Corp. and BlackBerry maker Research In Motion Ltd. each posted earnings that topped expectations.
For the week, the Dow fell 1.4 percent, the S&P 500 index fell 0.4 percent and the Nasdaq rose 1 percent.(commentary courtesy of AP)
With the crush of holiday activities, I just don’t have the opportunity to report RSI’s year to date results. I will post these results before the year is out. I think you will find it to be instructive, so please stay tuned.
There were no RSI picks after Friday’s market close. Catch you after the close on Monday.
A FALLING MARKET TODAY December 17, 2009
Posted by Marlowe Cassetti in Blogroll.add a comment
Citigroup’s surprisingly low pricing of a stock offer this week provides a clear sign that investors are still nervous about the banking giant’s ability to regain its financial health.
On Wednesday, Citigroup Inc. said it would sell 5.4 billion shares of stock at a price of $3.15 per share to help repay $20 billion in government bailout loans. That price was 9 percent below where shares were trading before the announcement.
"The market is not buying the Citi story right now," said Alois Pirker, a research director at financial consultancy Aite Group.
The U.S. government also balked at the deal, stepping away from selling a portion of its nearly 34 percent stake in Citigroup. (commentary courtesy AP)
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So the headlines tell the tale of a falling market. What about the Santa Claus Rally? Forget about it. There is really a flimsy basis for such a mythical event. That is why I want to rely on a objective system such as RSI. I don’t have to predict, I let RSI do all the work. Yes, its recommended ETFs are few and far between, but in this market this is a good recipe to help preserve capitol.
And as usual there were no picks from RSI. Catch you after the market closes Friday.
RISK ADJUSTED RETURNS REVISITED – MARKET MALAISE CONTINUES December 16, 2009
Posted by Marlowe Cassetti in Blogroll.add a comment
The stock market stalled after an early advance Wednesday as the Federal Reserve reminded investors that it would start to wean the economy from an array of emergency supports next year. 
The Dow Jones industrials slipped 11 points, while broader indexes ended with modest gains but off their highest levels of the day.
Investors knew several of the Fed’s programs would be dismantled in 2010, but the added detail about its plans as well as lingering concerns about inflation tugged at the market. (commentary & photo courtesy of AP)
I got an email from a fellow system developer commenting on my discussion concerning the MAR ratio. He correctly pointed out that MAR is computed differently than the ratio I was using. I use the annualized return computed over a span of three years and divide it by the maximum drawdown for the same period. My ratio is a risk adjusted annualized return. The MAR ratio is also a risk adjusted return but it is computed on a monthly basis and is geared more for futures trading where trades are more frequent and thus monthly return and drawdown are more of a concern. Anyway I probably shouldn’t be referring to my risk adjusted annualized return as the MAR ratio but instead as the RAAR. Whatever it is called it is still a useful metric for evaluating systems performance.
Yesterday I had an opportunity to listen to a broadcast of some well qualified “market experts” and economists discussing the state of the US and world markets and economy. My takeaway was they all expected the economy to improve over the next year, but at a slow pace. One expert referred to the current market as being in the grip of a malaise not knowing which way to move. It dawned on me this market malaise was contributed to the indecision influencing RSI’s lack of making new picks. That is there are no trends for the trend following modules to pick and there are no extreme price moves for the other modules to exploit. So I close tonight’s blog with the usual, no RSI picks today.
