SD - TRADING/INVESTING FOR 2018

[ira85]

In the horse race this week I'm on a gold mining stock, AU. I just looked at a chart going back to 2001. In 2006 it reached a high just over $60. It's been in the $6 neighborhood twice since then, 2015 and 2016. In the last 4 months it's moved up smartly from about $7.20 to $11.42 today. The last time AU had a sustained runup was 2016 when it went from under $7 to $23 in 8 months. Price tripled in 8 months. While AU was going up 300% the S&P 500 was going up 30%.

With the rise of bitcoin et.al. in recent years it seems like gold has been kicked to the curb. Maybe with the recent crypto debacle there's a chance for gold to be remembered.

I may get some of this. It looks very tempting to me. -ira

[sd]

I didn't see your post until this Sat pm IRA, but your assessment of AU trending higher proved solid this week- Hope you bought some-
I'm also viewing a 20 year perf chart with spy:AU:gld- Over the long term, AU has been a big underperformer compared to gld- but it has such volatility- and much wider swings, that a nimble trader could benefit -with stops in place-

Comparing the swings in 2018- Up 28% in Jan to decline-20% in August and back to +30% to date-While GLD barely had a 15% overall volatility during the same period-
Generally speaking, AU is GLD on steroids- but to the downside as well!
So , How would one trade this? and where would one exit?

Edit : Heres a 18 month chart that compares Spy, GLD, and AU- Really volatile!
stockcharts.com/h-perf/ui?s=AU&compare=GLD,SPY&id=p74568372284


Hmm, can't get the link to include SPY...or to annotate...Hadn't tried this linkable feature- I'm not getting the results I expected..

[ira85]

I appreciate your thoughtful analysis. I was only thinking about the upside potential based on big past up moves. But it has also moved big the other direction.

I'm a little more wary of pulling the trigger. I think gold related investments have been hurt by a strong dollar. But will the dollar stay strong and hold gold down? Or will the fed stop raising interest rates and let the dollar cheapen a bit? The day of the last rate hike might be a good time to buy something gold related, maybe AU.

Thanks SD and Merry Christmas

-ira

[sd]

- Merry Christmas IRA! and All!
I've been so busy on the work front this past year.....Haven't had the time to be as involved in following the markets-as I'd like-


Intend to make some alterations in 2019..... It looks as though it's shaping up to be a challenging year- with the markets in decline even while earnings are good. IRA's getting whacked- Astute traders would determine what is trending- and take that trend on a short term basis-

AU and GLD certainly look to be defensively benefitting- as well as TLT- - Finally looks to be the "time" for active management -as the buy- the dip gets the knuckles knocked.

EDIT:- What is the treasury-Powell- and Mnuchin- doing making attempts to reassure the markets this weekend? Conversing with major banks about their liquidity? Gov't shutdown- Talk about firing Powell? It all seems over reactive- and doesn't give people confidence-
Took a short positions in financials- in the active account- SKF, and bought some GDX the miners-
Also- adding some small size to the long position of VOOG- Was filled Friday at a -18% from the high $132.00 with a limit order I've had for some time-
puts the PE of the s&P approx 14.5- adding w/ limit 129.00 - Still have a larger limit order to buy at $105.00 on a flash sell- Purchased some at the close today- $126.30 Spy down -2.5% "Worst Day" historically before Christmas?
Also purchased VWO this am- basing sideways .

A recent contributor -Brian Livingston- at stockcharts has a book "Muscular Portfolios" - I picked up a copy this past week at Barnes and Noble-Hope to give it a read this week-Very nicely formatted , and his multiple portfolio approach is designed to provide actionable rebalancing suggestions based on positive momentum-into different asset classes- holding just 3 assets- muscularportfolios.com/
He points out that the portfolios are designed to lose less in periods of market decline, and to switch into defensive funds with positive momentum when market conditions see big turns- i.e. -bear market cycles-

For those of us with investment portfolios- his research and portfolio rebalancing approach may prove to be worth reading to understand how a methodical approach to portfolio management
mailchi.mp/fcfdaa326743/2018-11-12-paid-clean

"
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[sd]

Averaged down on VOOG 12-24 with 2 incremental adds- one going into the close at the low-
I have to think that the Vanguard value factor fund- presently $60 from a high of $81- a decline of -26% shouldn't have much more room to decline- but at this point-it's difficult for me to justify taking much more Risk.That was this am..... Buying vfqy-and vfva- quality and value-Both GDX and skf went South and became small losers on raised stops. Bought some energy-VDE on the bounce higher-
What is noted on CNBC is that a lot of funds will be re balancing as we close out the year and start the New year-
Since virtually everything I view is making a sharp reversal, broad momentum to the upside across multiple sectors- I also purchased Vanguards' Momentum Factor VFMF- VDE, and added to the VWO position-the thinking there is that the Emerging mkts may have most of the significant trade news baked in- appears to be basing sideways- and this US broad rally should be a positive force in lifting other areas. I still have approx 20% cash-bought the IBKR in the trading account-

At the Close- Dow closed up over $1,000.00- or +4.5%- largest one day gain since 2009-but in terms of % Mkt oversold bounce? Will it have any follow through to the upside this week?
I'm assuming it will- and that short covering along with perceived better values will prompt the markets to hold this level....and that Monday was the low for the markets- Earnings ahead in a few weeks- and perhaps that will add momentum if earnings are good-
Some things that made this market move notable- Trump was on TV suggesting that stocks are a good value at these levels- The Vix was in the upper 30's- and the put-call ratio was the highest it has been in years- all indicating sentiment was very bearish-
Talked with my son-in law yesterday- who is all in cash- about the difficulty of getting back ion because a sharp rally makes you feel it moved too much, and so you wait...and wait ...and wait...
Having this week off and able to spend some time at the computer but not continuously--glad to have been doing some buying - on the recent declines-and particularly Monday when things looked grim , Of course, I'm still in the red on all averages-Voog managed to close above the 132 level which I was also filled on last week- but I had purchased a higher partial position previously- dollar cost averaging in . Time will tell how prudent thagt approach was in buying the dip- After all- If one waited until the market gave a solid reversal signal to jump in- even at the close, one would have just been 5%
off the lows-

[sd]

12.27 Premarket, futures are down-we'll see what the open brings-I would think that the Monday's low would be the near term bottom to watch for as major support for yesterdays rally.
My thumbnail view taken from listening to the talk shows.....
We've technically bounced higher from the -20% level-bear market levels- retail sales were up + 5% this year- a strong consumer, strong employment- outstanding political issues- gov't shutdown, china trade tariff's, -but future talks in January; If Trump would get some trade deals with China, markets would rally higher..... Tax loss selling has to be done before the end of the year- and there will certainly be some actions there to lock in the losses vs gains. Housing has slowed -thanks to higher rates- Fed may be less aggressive in rising rates if the economy is slowing- and the President has eased up on rhetoric against the Fed/Powell. Listening to the market pundits-things don't appear to be as desperate as the market action indicated- Pissani pointed out that the PE ratio of under 14.5 was a 0-growth scenario -compared to historical PE's- so, that makes a good call for value-stocks and perhaps oversold low PE stocks- Historically, we've bounced higher from this degree of oversold conditions over the past 8 years - and that brings up a good point to remember- This has happened before, and we eventually moved higher....At those previous sell-offs, it certainly likely appeared that greater selling/market crash would occur- Fears of 2008-09- Joe Lavorgna on CNBC simply blames the FED for the negative market sentiment and expects further bearishness - lows - that can feed upon itself, and actually bring the economy down and slower.
Should the markets not hold the recent lows- how much greater % decline could we see- ? and where do you enter if you waited and finally sold off at -15 or -20% - at least talking about the broad indexes in those terms- Individual stocks can easily go to extremes- well beyond those averages.
What if I got this all wrong though??? -and 2019 does not see a stabilization and recovery? Averaging down on investments is fine IF the market rallies back near it's prior highs- and If the bull still has another leg-higher.....
an hour in, markets down - -1.5 see how it ends today, tomorrow.....

CLOSE: Came back in just prior to the close to find that the markets had staged a big turnaround- Dow was down over $600 pts and in the last 90 minutes reversed and closed up over $260.00- just over 1% - It was quite a strong reversal from where we were during the majority of the day, and it potentially indicates that a bottom level has been established- Have to see how it works out- and where we go when earnings come out in Jan....

[sd]

SMALL CAPS 600- MORE SIZZLE, LESS DOWNSIDE THAN IWM



Small caps 2000- IWM has periods of outperformance compared to the SPY- in 2018 , it was up 10.36% in late August while SPY had a 7.55%- peak in September. An article written sometime back in SA pointed out that the subset of IWM- The Small Cap 600- often had better performance due to quality of earnings- and growth characteristics- With larger moves to the upside also comes greater moves to the downside with the sector in general.
Viewing a perf chart- easily gives perspective: Small caps outperform both to the upside and to the downside- So -yes, more volatile-but also more opportunity if one trades or actively reallocates.
IWM- is the 2,000- compared with Vanguard 600 VIOO, IJR, SLY The 600 all outperform to the upside and decline less than IWM on the downside
The Vanguard fund closely follows the IJR-in overall performance- but overall VIOO outperforms - Since My investment allocation is with Vanguard and no trading commissions are charged trading Vanguard Etfs, the choice is obvious for me.
I will likely put in a split limit order to add some small cap exposure Friday am.
stockcharts.com/freecharts/perf.php?VIOO,IWM,IJR,SLY&n=200&O=011000

The link does not work for me- only shows VIOO - but if interested and the chart is active, you can input tickers in the box, separated by commas and hit go-

[sd]

12.28.18- Friday-
While the consensus seems to be that we were oversold on many fronts, there is plenty of caution that volatility is expected to remain high-and cautions that we may again test the recent lows-
Note the articles from Tom Bowley & the other stockcharts contributors-
stockcharts.com/articles/

I'll be buying some vioo with a limit at the open- in the investment account-
I'm also looking to buy CME- still up nicely on the 1 year- from 145 to a low this week 172.82-
TNA is the leveraged small cap- - Made a strong close off a higher low 36.58 -may dabble with a limit $39.10 in the trading account

3 pm view- I've put majority of my free cash to work today, was filled on all limits - and just for fun bought a few dollars worth of GE @ $7.58 this pm.
Setting a stop at $7.30 and following it on a fast 2 minute chart.
markets appear to be fading a bit with Dow & S&P slipping into the red a bit- sharp contrast with the buying surge yesterday going into the close

[sd]

An Early Final Post for 2018- Anxious to enter 2019!!!
This is more of a personal summation vs elements about trading-investing...
Since I don't bother with FB, linked in- ETC- This forum serves....Personal Blog I guess- Just The Way I put things into perspective-Writing is a release of sorts...
Tough year in retrospect... Keeping it in perspective- a net losing year- on several fronts-
Personal- Loss of my Mother - age 91 with a 6 mos diagnosis of stage 4 lung cancer- last January-passed June 1 @ 91
Nothing quite like a personal family illness/death to put things in perspective as to what should be most important in this life...
Thank goodness that my Wife was capable of taking on the majority of the caretaker's role during this time. Medical appointments, shopping, hospice visits etc-and time spent with her as a friend and supporter... lesson there is to prioritize what is most essential -and strive to keep that Balance of your priorities. I was fortunate in that I took that final week off, and was there to assist during her day's of passing- medication, feeding, comforting,during the physical decline ; and holding her hand and reading her Bible to her that morning as she gave her last breath- I feel fortunate that we had so many years together, and that I was there at her passing- It was known and expected, and yet it still leaves a void- I feel for those that never got the chance to say good bye...in person,,,, to those they love....
Work- Increasing demands - extended hours, work days- prompted an overall assessment that prompted a sitdown with the owner's of my company -just this past week- Had Vacation this week- Time to define what my priorities are - Work can be engaging, stimulating, challenging- and - becomes personally rewarding on those levels - as well as funding a standard of living-paycheck- that the Family relies on- It has taken up the majority of my time this past 1-2 years- perhaps the subject for a rant another time- But it doesn't give me the financial reward that compensates for the personal demands it requires in terms of Family or Free time- So, I'm ready to make that break-
I took action and met with the company owners this week and explained that I would not be able to meet their expectations for the time demands that would be required on the next project- and that some one else should assume that responsibility- I was/am prepared to be put out to pasture- and that may still be the outcome- but the response was much more positive than I expected- I hold a great deal of respect for what the company leadership is striving to attain, but I don't feel that i can afford to make the extended commitment in time .

Trading and Investing- 2018- I had done well this year- relatively- I sold with raised stops as we ran up in January's surge- and gradually repurchased
lower, and again caught a higher run - but then i simply failed to respond - i somewhat went on slow remote- - and stopped out on a number of positions in September , definitely did not have any perspective on the markets- gradually took some gains, then losses, got into cash , then started to make some repurchases as we declined further, thinking to Buy the Dip- MY absolute 2 largest losing positions were the only 2 individual stocks that i owned-
NFLX- and a late entry into AMZN- I had a very nice gain early in NFLX- and took a reentry and closed my eyes- AMZN was even worse- I added down as it declined- and here's the kicker- I sold my wife's position at a stop at $1940- a $900.00 gain- and it went higher so we repurchased- and determined Not to set a stop - Now it's in the $1400.00 price range-
As we entered this most recent volatile period, I've been adding to some positions and saw some repurchases - market moving higher- as we have hit the -20% level- i had raised cash in the ETF accounts this fall, and gradually made some repurchases- While the broad market is down -20% , i think I'm down about -10%- but we just had a +5% rally this week- I intentionally bought this past Friday, Monday, ?Wednesday- thinking we would not go much further down.
NO One KNOWS!-
In past eras , you would hear such wisdom's as "The market Climbs a Wall of Worry!" But not so easily said these days-
We hear that the market was selling at a historic low of 14.5 PE.
But, we are truly in unknown recent turmoil-
Global trade wars, tariffs; immigration, border walls; INTL politics- Energy- Politics- Impeachment- a locked gov't - FED POLICY_
An all-time low in unemplyment, Higher wage increases, a boost in productivity....
I have to Close this 2018- believing 2019 will bring better