Tortoise rally – Review of Ultra MidCap400 ProShares (MVV) March 31, 2010
Posted by Marlowe Cassetti in MVV.add a comment
Stock market slows its climb but ‘tortoise rally’ still produces best 1st Qtr since late ’90s. The stock market is taking some ages-old advice to heart: everything in moderation.
Stocks on Wednesday ended a first quarter that many investors and analysts would describe as healthy. The Standard & Poor’s 500 index is up 4.9 percent by amassing a string of steady gains that were far from the supersized jumps seen in 2009. The Dow Jones industrials are up 4.1 percent, but with unremarkable gains of 50 points here and 15 there. They’ve had few of the triple-digit swings that used to be commonplace.
The Dow fell 51 points, or 0.5 percent, to 10,856.63 Wednesday but still posted its best first quarter since 1999. It is approaching 11,000 for the first time in a year and a half. It’s up 9.6 percent after falling to 9,908.39 on Feb. 8. The Dow has closed up 19 of the last 24 days.
The quarter has padded the Dow’s huge 2009 gain, putting the average 65.8 percent above the 12-year low of 6,547.05 it reached on March 9 of last year. However, it’s still down 23.4 percent from its October 2007 peak of 14,164.53.(commentary & photo courtesy of AP)
**********************************************************************
Well I don’t have a problem with this tortoise rally. It is nice to have the market trending slowly but surely on this upward incline.
Reviewing and updating prior RSI picks, let’s take a look at Ultra MidCap400 ProShares (MVV):
RSI issued a buy for MVV after the market closed on March 12, 2020. I cautioned at that time that MVV had moved up smartly to the upper trend line. I held up on buying for a few days. It subsequently rolled over but recently consolidated at this current price. It still is away from the -$1.34 stop loss level. Let’s see what happens.
RSI had no picks after today’s close. I’ll catch you later.
Stocks waver after upbeat economic data –Bought USO March 30, 2010
Posted by Marlowe Cassetti in USO.add a comment
Stocks waver after better-than-expected reports on consumer confidence, home prices. Stock prices fluctuated in a narrow range Tuesday as investors made last-minute portfolio adjustments as the end of the quarter approached.
The mood in the market was upbeat after a report that consumer confidence grew more than expected in March, although it’s still well below historical levels that indicate a strong economy. A separate report showed home prices inched higher for the eighth consecutive month.
Analysts expect trading to be erratic the next two days. At the end of a quarter, institutional investors typically engage in what’s known as window dressing, or trades intended to boost returns on reports sent to shareholders.(commentary & photo courtesy of AP)
******************************************************************
Today USO – United States Oil Fund held its own after a strong move up yesterday, so I bought the prescribed number of shares. This ETF trades on huge volume so it was no problem to get a good fill. I enlarged the chart to focus in on the past three months. The next stop is for oil to continue its upward path.
Recently I listened to a podcast interview of Mark Hulbert. I have great respect for Mark’s work. He has followed investment newsletters for over 30 years. In summary, Mark believes that the road to investment success is to have a strategy and stick with it. It really doesn’t matter how good the system is, what matters is the consistent use. This is something to ponder. Maybe I shouldn’t dicker around with RSI and just lock up the code?
No RSI picks tonight. Catch you later.
Wall St Rises on Commodity Plays – Buy United States Oil (USO) March 29, 2010
Posted by Marlowe Cassetti in DBC, RSP, USO, UUP.add a comment
Stocks rose on Monday as miners and energy companies advanced on dollar weakness and investors bought recent high fliers as the quarter’s end approached.
But overall volume was light at the start of a holiday-shortened week that will cap the S&P 500′s .SPX fourth straight positive quarter. Although the underlying tone was positive, slippage in financial shares, including a 3.3 percent drop by Citigroup curbed a broader market advance.(commentary by Reuters)
****************************************************************************************
I am in the process of elaborating on the RSI System by providing pages defining the system. The first such page discusses and contrasts RSI with the Turtle Trading System (TTS). This page is here. As other pages are developed I will announce their arrival.
*****************************************************************************************
I plan to feature a chart or two of RSI’s picks that are still being held and give some observations and comments. I will concentrate on those that I hold, but I will try not to ignore those picks that I chose not to buy.
The first is DBC which had a great day today after languishing for many weeks and as in the headline this commodity fund got a boost.
It has been hugging the lower ascending trendline since early February. During that time it has underperformed the US stock market as highlighted by the violet line on the second chart. A downward sloping plot means the the stock in question is underperforming the S&P 500 Equal Weight Index RSP. So now the question is.. will today’s strong showing translate in a profitable advance? To answer that question I want to see this ETF hold its own or exceed the market. The lower chart is the 20 day Average True Range (ATR) that I have mentioned times. I measure volatility as 2.5 times this ATR and I use this number to set stop loss, profit alerts and position size. With an ATR reading of $0.385 gives a volatility of 4.11% which falls into the low range of volatility. Okay, so the dollar falls and commodities rise. Let’s look at RSI’s last pick on the dollar rising….UUP.
As I observed when RSI first picked this last Friday, it is trading at its upper band plus it has very low volitility. I would wait on this one.
****************************************************************************************
And finally what you all have been waiting for:
- Buy 173 shares United States Oil (USO); stop loss $5.69 below the entry price; trailing stop alert $17.06 above entry price
If you are dismayed and bewildered as to the position sizing and stop/alert price levels, bear with me for a moment. This RSI pick is from its long-term, trend following module. To be viable long-term the thresholds must by necessity be wide. And for the same 1% portfolio risk, the number of shares must be scaled down. Does that make sense?
If you figure that a 173 share stake in USO will cost $6,913 plus commission, or about half of what other RSI modules would normally generate. As we look to generate long-term profits our risk percentage must be cranked up. If you are still confused, please add a comment.
Thank you for your indulgence. Catch you after the market closes Tuesday.
Wall Street Flat – Buy PowerShares DB US Dollar Index Bullish (UUP) March 26, 2010
Posted by Marlowe Cassetti in UUP.add a comment
The Dow and S&P ended flat on Friday, giving back earlier gains after the sinking of a South Korean naval ship, while tech shares’ weakness kept the Nasdaq in slightly negative territory.
The Dow Jones industrial average rose 0.08 percent, to end at 10,850.36. The Standard & Poor’s 500 Index inched up just 0.07 percent, to 1,166.59. But the Nasdaq Composite Index slipped 0.10 percent, to close at 2,395.13.
About 8.61 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year’s estimated daily average of 9.65 billion. There were roughly an equal number of advancers and decliners on the New York Stock Exchange, while on the Nasdaq, slightly more stocks fell than rose.(commentary & photo courtesy of Reuters)
*****************************************************************
I am reading more and more market pessimism on the Internet and in the print media. That pessimism appears to be growing. There is a lot of nervous money out there along with the money sitting on the sideline. Is it time to bail out? Or is it time to get aggressive? My plan is simple. I will continue to follow the RSI methodology. I wait for RSI to generate new buy ideas and I adjust my stops to compensate for the volatility. I don’t need to predict the future. It is all pretty much cut and dried.
Today I received a copy of the book Trade Your Way to Financial Freedom (second edition) by Van Tharp. I know it is a bullshit title, but don’t let the hokey title turn you off. It is a valuable resource for anyone developing trading methodologies. I obtained the first edition back in the late 1990s and I lost my copy after loaning it to someone who moved away. I got the idea for position sizing from this book and the Turtle Trading methodology reinforced this strategy, which I subsequently incorporated into RSI. I’m anxious to reread this and maybe I will learn something new.
As we close out another week in the market RSI has generated a new buy recommendation:
- Buy 955 shares PowerShares DB US Dollar Index Bullish (UUP); Stop = -$1.05 Target = +$0.84 Volatility = 1.74%
Please note … Due to UUP having a very low volatility of 1.74% this trade would encompass a trade of $22,881 or 24% of the hypothetical $100,000 portfolio. That is way to large, so if you trade a smaller amount you are risking less than the suggested 1% and probably a more prudent way to go.
UUP has been on a strong up-trending channel since early Dec. 2009. It is trading near the upper channel trendline and may be a bit extended. I wouldn’t have a problem with waiting for a price pullback.
Have a great weekend and I’ll catch you next week.
Wall Street Finishes Flat – Monitoring EUO & UYG March 25, 2010
Posted by Marlowe Cassetti in EUO, UYG.add a comment
Stocks ended flat on Thursday, dropping off earlier highs as a weak U.S. bond auction and global debt concerns continued to weigh on investor sentiment.
Indexes advanced for most of the session, with the Dow and S&P hitting fresh 18-month highs, but their gains mostly disappeared after the auction of seven-year notes and comments from European Central Bank President Jean-Claude Trichet on issues surrounding Greece’s sovereign debt.
The Dow Jones industrial average was up 0.05 percent, to end at 10,841.21. But the Standard & Poor’s 500 Index .SPX was down 0.17 percent, at 1,165.73. And the Nasdaq Composite Index was down 0.06 percent, at 2,397.41.(market commentary & photo courtesy of Reuters)
**************************************************************************
As my loyal readers know, I am continually refining and adding (and sometimes dropping) modules to the RSI system. I have a trend following module that is just about to go primetime. In my evaluation of this module I noticed that in the past few days it picked the following funds just prior to them roaring off to the stratosphere.
- UltraShort Euro ProShares (EUO)
- Ultra Financials ProShares (UYG)
Let’s take a look at these two double leveraged funds:
Currently these uptrends are very powerful. I think it would be instructive to monitor these two funds for a possible price retracement, and reevaluation. Or in simpler terms … don’t chase maybe buy on pullbacks.
Catch you again … maybe this weekend after the market closes.
Verge of Another Big Rally? – ETFexpert.com March 23, 2010
Posted by Marlowe Cassetti in AMJ, MVV, SSO.add a comment
Investors are starting to believe that the stock market is on the verge of another big rally.
The Dow Jones industrials rose 103 points Tuesday, their biggest point gain in five weeks. The day’s economic news 
was tepid as the National Association of Realtors reported a drop in homes sales last month that wasn’t as steep as forecast. But analysts said many investors, after seeing the Dow rising 15 out of the past 18 days, grew afraid of missing out on further gains.
The report on housing was typical of recent economic numbers that have been somewhat better than expected but still point to a weak economy. Sales of previously occupied homes fell 0.6 percent last month to an annual rate of 5.02 million. Analysts expected sales would fall 1 percent to 5 million units, according to Thomson Reuters.
The Dow rose 102.94, or 1 percent, to 10,888.83, a new high for 2010. The Dow is at its highest level since Sept. 26, 2008. The Standard & Poor’s 500 index rose 8.36, or 0.7 percent, to 1,174.17. It also stands at an 18-month high. The Nasdaq composite index rose 19.84, or 0.8 percent, to 2,415.24, a 19-month high. (the above market commentary & photo courtesy of AP News)
*****************************************************************************
Gosh, on the verge of another big rally??? Wasn’t that what RSI was heralding last week with it’s picks of four 2X long funds? Maybe it was giving us a heads up to a new market leg up. We shall know in the fullness of time.
Speaking of these ETFs the two in my portfolio, Ultra MidCap400 ProShares (MVV) and Ultra S&P500 ProShares (SSO) made great gains today. Yes, a few days isn’t my investment horizon but these results are a good harbinger.
Change in topic … I’m often asked to recommend sites geared towards Exchange Traded Funds. From time to time I will feature a particular ETF site, Today I want to cite ETF Expert. Gary Gordon gives great coverage in the ETF/ETN/CEF landscape. I’ve found some great ideas on Gary’s site plus he has a great weekly podcast. Recall when I said I purchased JPM Morgan Alerian MLP Index (AMJ)? I got that idea from ETFexpert. This site is a real gem and well worth the look and listen.
Since there were no RSI picks tonight I will end it here. Catch you tomorrow, however if these is no RSI action I may skip blogging for the session.
Markets Rise on End of Med Uncertainty – And the The Story Is…. March 22, 2010
Posted by Marlowe Cassetti in KRE.add a comment
Stocks rose on Monda
y, building on last week’s strength, as the passage of a bill overhauling the healthcare system ended much of the uncertainty about the issue for investors.
While some analysts raised concerns the bill, approved on Sunday, could squeeze company profits and add to costs, they said much of the negative impact was already priced in.
The Dow Jones industrial average was up 0.41 percent to 10,785.89. The Standard & Poor’s 500 Index was to 0.51 percent to 1,165.81. The Nasdaq Composite Index was up 0.88 percent to 2,395.40.(market commentary & photo courtesy of Reuters)
*****************************************************
RSI has no new picks today, so I want to discuss an observation I have made. I’m a financial podcast junkie. I listen to many financial and economic commentators. Most are informative and educational. Some are even entertaining. Many have a common theme … developing a story and then forecasting the outcome of a market, a stock, a sector, etc. Someone may have a great story about the coming commercial real estate collapse and then issue a buy (or sell) on a particular stock or sector. I’m sure some of these scenarios may come true and the particular selected security would hit a homer. But since there are so many stories that, on balance, few homers are scored. Sure there are some successful forecasters whose stories lead to a good financial outcome. But can they do that consistently? I think not.
With an objective trading system, such as RSI, you don’t need a story. If an ETF pops out of the system, you have a candidate for your investment consideration. You may wish to concoct a scenario to rationalize the selection or you may just chose to accept the pick without a story.
A few weeks ago when SPDR KBW Regional Banking (KRE) was picked by RSI it was difficult for me to rationalize a story to get enthusiastic about this ETF. But I took the trade anyway. And after a 16% gain I’m happy that I didn’t need a story …. whatever.
Catch you tomorrow.
Stocks Fall on Greece Worries – A Look at the Ultra Picks March 19, 2010
Posted by Marlowe Cassetti in MVV, SAA, SSO, UWM.add a comment
Stocks halted their steady climb Friday after renewed concerns about Greece’s ability to pay its debts left investors questioning a global economic recovery.
The Dow Jones industrial average fell 37 points after advancing for eight straight days. Broader indexes also fell. Major indexes posted gains for the week.
Stocks in the U.S. have been rising since a January-February slump. Investors are encouraged that the economy is getting better, even if it’s at a slow pace. The modest improvements have translated into a stock market that creeps higher rather than leaps as it did last year. Still, even with incremental gains some analysts warn that the market needs some pullbacks to avoid getting overheated.(commentary & photo courtesy of AP)
*********************************************************************************************
Let me take the opportunity to discuss RSI’s recent ultra ETF picks. First let’s look at the performance charts for all four.
Today, the market had a decline and brought all these funds down. My friend Dave noted that these funds have had quite a run since early February. Although I bought two of the four I have the recommended stop loss levels (see the prior blog posts for the recommended stop loss prices points). If you haven’t a position, it would be instructive to monitor these four funds for profitable opportunities. Remember these ultra funds are very aggressive and not for long-term holding.
No RSI picks tonight. Have a great weekend.
Dow climbs for eighth straight session – This is scary … Buy Ultra S&P500 ProShares (SSO) March 18, 2010
Posted by Marlowe Cassetti in SSO.2 comments
The Dow industrials advanced for an eighth consecutive session on Thursday, lifted by a rise in Boeing’s stock, while a mixed group of economic figures kept the broader S&P 500 in check.
The Dow’s gains came even though more stocks declined than advanced on the broad New York Stock Exchange and on a lower volume day in terms of trading, one day before the expiration of quarterly futures and options.
The Dow Jones industrial average gained 45.50 points, or 0.42 percent, to end at 10,779.17. The Standard & Poor’s 500 Index dipped 0.38 point, or 0.03 percent, to 1,165.83. The Nasdaq Composite Index gained 2.19 points, or 0.09 percent, to close at 2,391.28.
The Dow’s eight-session winning streak is the longest since an eight-day string of gains that ended Aug. 27, 2009.(market commentary & photo courtesy of Reuters)
********************************************************************************************
RSI continues to pick double leveraged ETFs …. and today it is:
- Buy 396 shares Ultra S&P500 ProShares (SSO) Stop = -$2.52 Target = +$4.21 Volatility = 5.02%
SSO was picked yesterday and today by a different module. This redundant pick is a validation of the first pick….that is my interpretation.
I still don’t fully understand why all the double long funds have been picked by RSI since last Friday. My only guess is that something within the bowls of the markets, contained within over 700 ETFs RSI massages, is a precursor of the start of a sizeable bull rally. This is scary. Do I trust RSI to back up the truck and bet the farm? This is our dilemma and only the fullness of time will we know if this is correct…and by then it will be too late to capitalize on this opportunity.
Until then we will monitor the market and jump on the bull and hope we don’t miss the saddle.
Catch you after the market closes Friday.
Stocks Climb – Buy Ultra Russell2000 ProShares (UWM) March 17, 2010
Posted by Marlowe Cassetti in MVV, SAA, TIP, UWM.add a comment
The stock market continued its slow but steady advance of the past month as investors grew more confident that interest rates will remain at low levels.
The Dow Jones industrial average rose 48 points in its seventh straight advance and closed at a new high for 2010. The gain means the Dow has joined the Standard & Poor’s 500 index and Nasdaq composite index in reaching the best levels since 2008.
The catalyst for this latest gain was the Fed’s decision Tuesday to hold its key lending rate at a record low of essentially zero. A government report that prices at the wholesale level fell by the biggest amount in seven months boosted investors’ belief that inflation is in fact being contained. That allows the Fed to keep rates low.(commentary & photo courtesy of AP)
**********************************************************************************************
Okay, the drill today was the same as yesterday .. sell some of my “holding funds” (in this case TIP) and purchase RSI’s recent pick which was Ultra SmallCap600 ProShares (SAA). As I mentioned in yesterday’s blog, there is a very high correlation between the four double leveraged market indices. Therefore, the purchase of MVV and SAA have reached the limit due to correlation restrictions. This is directly from the Turtle Trading Rules.
Now, after the markets close RSI has issued another, similar leveraged market index buy signal:
- Buy 750 shares Ultra Russell2000 ProShares (UWM) Stop = -$1.34 Target = +$5.57 Volatility = 6.58%
I will have to personally pass on this pick due to the aforementioned correlation restriction. You are certainly free to act on this, at your own risk of course.
Catch you tomorrow.
