The %R Solution Explained January 31, 2011
Posted by Marlowe Cassetti in GDXJ.add a comment
The market ended up today with the S&P up 0.77% and the NAS up 0.48%. The RSI portfolio soared up 1.1%. Not too shabby for a portfolio sporting a 17% cash position. Now let’s get on with the headline topic .. %R.
First of all, capital R is the risk in dollars and lower case r is the risk in percent. For the purposes of this blog, cap R is $1,000.00 which is 1% (lower case r) of the hypothetical $100,000 portfolio. In other words the RSI system is predicated that each trade risks only $1,000 through the utilization of protective stops that bails out when a -1R loss occurs. When gains are realized an alert is set at +2R. The alert triggers a 0.3R trailing stop which means setting a stop $300 below the most recent high. The RSI module may issue a sell signal in the interim between the -1R to +2R interval depending on price movement.
This is a backdrop to looking at the progress of portfolio positions. Today the RSI portfolio has two positions that are close, very close to the +2R trigger point. Likewise there is only one losing position, but it is a mere -0.2R. Nothing to be concerned with, but it will be monitored and sold if need be at the -1R level, just like GDXJ that recently slid to that level. It is tempting to look at percentage gains, but I really pay attention to %R. That is the action number.
RSI had no picks today. Catch you later.
Flat market today – RSI picks CurrencyShares Euro Trust (FXE) January 25, 2011
Posted by Marlowe Cassetti in FXE.add a comment
Today all the major market averages ended close to unchanged; in other words flat. RSI picked the Euro currency fund:
- Buy 133 shares CurrencyShares Euro Trust (FXE); Stop = -$7.50 Target = +$22.48 Volatility = 2.20%
I’m a bit reluctant to recommend this low volatility fund because of the large dollar position required to risk -1R. It is based on the principal of the lower the volatility the larger position required. What’s the harm? Well it ties up portfolio capital which has a tendency to dampen portfolio performance.
The chart shows the recent Euro rise, which triggered RSI’s buy recommendation. This rise may only be temporary, so if you are interested in this fund (and I’m not) you might wish to wait for this move to materialize.
Catch you later.
Market up today – RSI picks iShares MSCI Italy Index (EWI) January 24, 2011
Posted by Marlowe Cassetti in EWI.add a comment
Wow, the last time I posted to this blog was on Jan. 7th. RSI has been stone quite for many days. Despite the hit to the materials sector ETFs that populate the RSI portfolio, it has been holding its own. Today it had a great day. Let’s look at today’s pick:
- Buy 484 shares iShares MSCI Italy Index (EWI); Stop = -$2.07 Target = +$6.20 Volatility = 4.53%
RSi picked this fund back in early November. It slipped soon after this pick. I recommended waiting for a pullback and I didn’t buy it at the time. Now it has recovered from a sharp drop and zoomed up into today. Same advice .. wait for another pullback.
Catch you later, hopefully sooner rather than later.
Markets end off as the volatile week ends – Sold GDXJ January 7, 2011
Posted by Marlowe Cassetti in GDXJ.add a comment
This week has been rough on the RSI portfolio. Up one day and down the next. And then today, GDXJ hit the –1R threshold and it was sold. Oh well, that’s the way the cracker crumbles. And to top it all off, there were no buy recommendations from the RSI system. So what’s next? That’s a good question. The portfolio now has a good cash reserve position and I will await the next buy recommendation. I’m also looking at some higher yielding ETFs and CEFs. I’ll keep you up to speed on any portfolio changes,
Have a good weekend,
Another year end pick – Buy iShares Dow Jones US Home Construction (ITB) January 2, 2011
Posted by Marlowe Cassetti in ITB.add a comment
Despite a slow Friday in the market, RSI picks another fund today to round out this good market year. The pick is:
- Buy 656 shares iShares Dow Jones US Home Construction (ITB); Stop = -$1.52 Target = +$4.57 Volatility = 4.62%
The month of December witnessed strong price appreciation in ITB. It has consolidated over the past few days and this may be a good opportunity to enter this trade. The money flow indicates that there is good interest in this sector.
I hope everyone had a great holiday season … not back to work. Catch you later.
