Market update - week ending - 9/30/2012

Haven't had much of a time last couple of weeks but thought at least, I should put in a quick update. 

ETF	Status	Notes
TLT	Long	Stop Loss: Close below 118
DBA	Long	Stop Loss: Close below 29
SPY	Long	Stop loss on a close below 133
UNG	Long	Stop loss on a close below 17.5
GLD	Long	Stop loss on a close below 153.

Market update - week ending - 09/14/2012

Bond (TLT) is no longer long. Signals continue to be long for all other asset classes.
Fed's QE3 announcement took all asset classes further into the long territory. 

ETF	Status	Notes
TLT	Cash	Waiting for next signal
DBA	Long	Stop Loss: Close below 29
SPY	Long	Stop loss on a close below 133
UNG	Long	Stop loss on a close below 17.5
GLD	Long	Stop loss on a close below 153.

Market update - Week ending - 08/31/2012

All asset class continue to be long.

UNG had a bit of a whipsaw during the middle of the week where it closed below 18 on Aug 27th. and was back above 18 at COB (close of business) on Aug 29th. Signals continue to be long for all asset class.

ETF	Status	Notes
TLT	Long	Stop Loss: Close below 120
DBA	Long	Stop Loss: Close below 29
SPY	Long	Stop loss on a close below 132.5
UNG	Long	Stop loss on a close below 17.5
GLD	Long	Stop loss on a close below 153.

Stay long and stay strong!

Market Update - Every asset class is LONG! - 8/22/2012

Have you seen this happen before? I haven't.

Every asset class is LONG!

A delightful situation for those who like diversifying. Perfect time to buy all asset classes, if one hasn't already done. Subsequently, reallocate more into the ones that outperform! 

Nothing can get easier than this. Does it?

ETF	Status	Notes
TLT	Long	Stop Loss: Close below 120
DBA	Long	Stop Loss: Close below 29
SPY	Long	Stop loss on a close below 132.5
UNG	Long	Stop loss on a close below 18
GLD	Long	Stop loss on a close below 153.

Market update - week ending - 8/17/2012

There is no change to the overall structure of the market. 
Bonds (TLT) continues to underperform. 
Stock (SPY), Agriculture (DBA), and Natural gas (UNG) continue to remain long. 
Gold (GLD) continues to be neutral. 

ETF	Status	Notes
TLT	No position	Waiting for next signal
DBA	Long	Stop Loss: Close below 29
SPY	Long	Stop loss on a close below 132.5
UNG	Long	Stop loss on a close below 18
GLD	No position	Buy on a close above 159. Subsequently, stop loss on a close below 154.16.

Concepts that are worth learning and applying to your trading strategies:

• Trend is your friend: Buy high and sell higher
• Goal is not to make more money but how to loose less: In other words, capital preservation is much more important than an attempt to make more money.
• Have a plan and follow it: Know your exit points for all longs and shorts you hold.
• If you have a trading strategy, follow it. Importantly, you must also know when not to follow it. Have fun!

Ratio charts - A powerful tool for capital preservation

You will not see many texts or articles around Ratio charts. However, many traders consider that as a serious and important tool to decide how to allocate their assets. In simple terms, Ratio charts are simply charts that divide one scrip with that of another. As an example, if you divided SPY with that of PTTRX, and plotted the trend, it would provide you with a graph that would present the relative performance of SPY against Pimco's bond fund PTTRX.

An article Relative Strength Today: Ratio Charts by Ed Carlson that is a good tutorial and worth a read.

Now let's analyze the Ratio chart of SPY and PTTRX below with a simple rule: When the 100 day minima is breached downward, allocate heavily in PTTRX and reduce exposure to SPY. Likewise, when the ratio value goes above previous breached 100 days minima, allocate more heavily towards SPY and reduce exposure to PTTRX.

A very simple strategy like the one noted above would have resulted in identifying the macro picture of bonds outperforming index in 2000 and 2008 well before the crash. The current macro picture continues to favor SPY instead of bond and a crash (as touted by several financial pundits) is not immediately visible. Unless the 100day minima of Index versus Bond is breached, stay strong, safe and invest in equities.

Market update - Week ending - 8/10/2012

The theme is that most asset classes are in the long territory.  
Specifically SPY, DBA and UNG are long. GLD is neutral. 
Bond (TLT)is now neutral as well after being a significant under performer last week. 

ETF	Status	Notes
TLT	Cash	Waiting for next signal
DBA	Long	Stop Loss: Close below 29
SPY	Long	Stop loss on a close below 132.5 (reduced the stop instead of increasing it, willing to take a little more risk to avoid whipsaws)
UNG	Long	Stop loss on a close below 18.
GLD	No position	Buy on a close above 159. Subsequently, stop loss on a close below 154.16.

Market update - week ending 4th Aug, 2012

No fundamental change in the signal for various asset classes.

• SPY continues to remain long.
• TLT is facing resistance and stop is now moved upwards to 125.5.
• DBA is long
• GLD's still not long and been in the neutral zone for some time now.
• UNG continues to be long

The theme remains that SPY, TLT, DBA are all long and GLD is about to turn long.

ETF	Status	Notes
TLT	Hold	Sell on a close below 125.5
DBA	Long	Stop Loss: Close below 29
SPY	Long	Stop loss on a close below 132.5 (reduced the stop instead of increasing it, willing to take a little more risk to avoid whipsaws)
UNG	Long	Stop loss on a close below 18.
GLD	No position	Buy on a close above 159. Subsequently, stop loss on a close below 154.16.

Happy trading!

Market update - week ending 27th July, 2012

Big day for the market today, significant changes that are worth noting.

• SPY went long.
• TLT is facing resistance and stop is now change to 123.82
• DBA has been long for a while
• GLD's buy price is now slightly higher 159.2 but even GLD is close to turning long.
• UNG is long as well

So, the important theme is that SPY, TLT, DBA are all long and GLD is about to turn long. Implying, all asset classes are in the green. Message: Allocate your portfolio long and give appropriate asset allocation based on your view of which asset class is likely to outperform. This is fun time and CONTINUE to watch which ones are outperforming so that you can allocate more on the ones that do better than the others.

ETF	Status	Notes
TLT	Hold	Sell on a close below 123.8
DBA	Long	Stop Loss: Close below 29
SPY	Long	Stop loss on a close below 135.
UNG	Long	Stop loss on a close below 18.
GLD	In cash	Buy on a close above 159.2. Subsequently, stop loss on a close below 154.16.

Market update - week ending 07/15/2012

Since last week, there is no change to the plan; IOW, no change to the trigger points and stop loss points.
Markets continue to favor bonds at this point of time as compared to other asset classes in spite of Friday pop in stock prices across the board.

ETF	Status	Notes
TLT	Hold	Sell on a close below 122
DBA	Buy on a close above 29.6 or Hold	Stop Loss: Close below 29
SPY	In cash	Buy on a close above 138. Subsequently, stop loss on a close below 135.24.
GLD	In cash	Buy on a close above 158. Subsequently, stop loss on a close below 154.16.

Watch relative performance of asset classes

It is now time to watch how Gold, Stocks, Bond and Agricultural funds are performing. Gold has been lacklusture but stable for almost a year. Agriculture funds (PCRDX, DBA etc.) have underperformed for more than a year. Most of the world stocks have underperformed. US Bonds have done quite well over the same period of time. Finally, its election, and not uncommon for cyclic rotations and smart money to move from one type of investment to another during this period. The approach below provides a simplified view on entry points for investments in various asset classes. The approach is one of buy high and sell higher once the trend has been established.

What are inflection points for each stock/ETF?

• Buy SPY on a close above 138. Stop loss (on close) - 2% after trigger
• Hold TLT if price (on close) is above 122.
• Buy Gold on a close price above 158. Stop loss (on close): 2%.
• Buy DBA on a close price above 29.6. Stop loss (on close): 2%.

How could one reallocate their portfolio?
There are many different ways and ultimately, everyone has to decide on their risk taking appetite but here is one approach. Lets say, SPY and DBA trigger above their close prices, TLT stays above its stop price and Gold doesn't trigger. In that case, you would need to have positions in TLT, SPY and DBA and you could allocate them equally and as one scrip outperforms another, put a higher allocation towards the one that is outperforming.