MBI/ABK are chicken feed. The elephants in the room are FNM/FRE.

Yes, but FNM/FRE are tied to ABK/MBI/PMI/RDN and similar......

KD, I went back and watched the Technical from the 13th of Feb and it appears we have retraced that 200 pt move up over night in the Futures. Do we now rollover from that 1368 point or do you think this portends a run up to the 200 dma? Seems like the rally on bad news is without merit and the news tomorrow and Wed. should see another collapse. Others seem to think we put in a bottem on some of the Financials and they will lead us higher. I don't see it especially with the 38.2 holding and the news from the monos bad anyway you slice it. But the pump continues.....

Actually, this kinda of schizophrenic market, is just making equity investors less and less willing to invest.

KD--thank you again for your Ticker!

It's election year, and it's not surprizing that the Pump Monkey's are mulling about, which ever party wins, the promise of money is a given--for the clock is wound--for 9 more months- till we get to the next Presidency.

Of Course, the Administration doesn't want it to blow. Then they would have to fix it.

This next month, and how it plays out basically will set the pre-text--they are really just buying time.

I think that LLoyds could be OK but Barclays? Surely they can't can lie through it

Quote:

By my math we're down 15% from the highs in the S&P 500. Is this a good time to buy?

Let me just leave you with an old, but classic statistic - on average, stock prices fall by 30% from peak to trough in a recession.

That means we're only 1/2 done, and if you use the last recession as a guide (2000-2003) it took you seven years to get back to "break even" if you bought at the top of the S&P 500, and that assumes you don't care about actual purchasing power.

Karl - Why would the overall market top and or bottom EVER MATTER? Unless its for timing on when to enter and leave the market place. Even then I don't really see reason to really give a flying ****.

The way I do it;

You enter at a point where you are comfortable and ride it to a point where you want to get off; place your wagers accordingly. The overall number NEVER matters; long, short or suicidal. The risk is whether you are right or wrong...

Quote:

Karl - Why would the overall market top and or bottom EVER MATTER? Unless its for timing on when to enter and leave the market place. Even then I don't really see reason to really give a flying ****.

Because if I buy now "for the long haul" and I'm wrong (early) it may be three or more years before I get back to break even.

The first rule of investing is "don't lose money."

Dollar-cost-averaging sounds good, but in fact in a bear market it leads to returns that lag the index significantly.

In fact if you're a "long term" investor you and just follow one single signal - the 20WMA over the 50WMA, with crosses of at least 1% required, historically speaking you are WAY ahead of the S&P 500.

This is the simplest market timing system there is and over the last 20 years it has NEVER failed to protect you.

That is, you go to CASH whenever the 20WMA goes 1% or more below the 50WMA, and you go back long in the index when the 20WMA crosses by at least 1% over the 50WMA.

This signal would have put you in the market in early 1989, removed you in late 1990, returned you in early 91, whipsawed you once (but at no loss) from mid 94 to early 95, removed you at the end of the 2000, returned you to the market in the early summer of 03, and most recently just issued a sell signal a weke or so ago.

You would have caught ALL of the bull moves, suffered very little of the bears, and for the whipsaws (of which there have only been two, with only one short-term), never lost more than 1% of the potential appreciation.

Such a strategy would positively ****ing CLOBBER the index moves over that same 20% period "in gross" as you'd miss basically ALL of the big swoons.

If you're a TRADER then you look at things differently but as a long-term investor (10+ year time horizon) this is one of the FEW sane timing signals that is both trivially easy to follow, is 100% mechanical and has NEVER ****ED YOU.

Interesting that the market gapped down after MLK. Today it is gapping up.

Pump monkey set-up from last holiday weekend. They were probably expecting majority to stay short, so the monkeys are out in full force pumping away.

KD, how would you build the chart using the above criteria. What would the time horizon be?

Thanks
TB

I just told 'ya..... 20 and 50 week moving averages. Crossovers must be 1% to count, once you get one you keep the trade on until you get a 1% cross in the other direction.

Go look at a 20 year weekly chart of the SPX with those on it and you'll see how well it has performed for long term investors.

I did your excercise over at stock charts 20 week MA = 140 days (1358), 50 week MA = 350days (1182), this, and please correct me if I'm wrong, indicates jumping ship when the 20 week moves though the 50 week, which occurs around 1170, or ~170 point downward move or another 12% loss, being that I'm in cash already, though I don't dispute the accuracy of this technique, at this point watching you ticker videos and reading your posts seems a more prudent method of testing the waters or waiting for someone like Tim Wood to say his extremely extended 4 year cycle low has been reached. I don't know if you follow Tim but I've been reading his stuff over at Financial Sense and listening to his weekly web casts. So far he seems to be like minded with your macro perspective. I will be watching for the down side target and re-emergence as a buy signal. Thanks for this hidden gem as I'm not a trader just someone trying to maximize their 401.

No Storm, the 50 is at 1469 right now. The 20 is at 1449. You got the signal this week (1% divergence.) Last week it was one point off (1470 and 1457, which is 13 points, as opposed to the 14.5 you need for 1%)

That takes you out at 1350 as of Friday.

The point of this sort of signal isn't to get you out for 10% drawdowns - it is to avoid the 30% and worse ones. The reason is that the 10% "corrections" tend to disappear pretty quickly, and for a long-term investor they're irrelavent.

You want to avoid the big ****-in-the-ass moves, however, as those are the ones that will destroy your return over a long period of time.

For a long-term investor the goal is simply to beat the index against which you benchmark with a smaller beta. There is no trick to beating the index with a LARGER beta, because with the larger beta comes more risk!

If you're out for the bear markets and in for the rest of the time your beta will be materially under 1.0 (right around 0.7-0.8) yet you will TROUNCE the indices over a long period of time.

This sort of strategy is ideal for someone in their 20s or 30 and the first half of your 40s who has 20+ years to retirement, has absolutely no desire or need to touch any of the money, and is simply interested in long-term capital appreciation that exceeds the benchmarks with less risk.

During the "off" times you go to a Treasury Money Market account (since this is presumably in a tax-advantaged account you don't care about taxes, as you don't pay them on cap gains until you withdraw) and during the "on" times you are 100% in an index fund such as SPY.

Over the last 20 years this has been a barnburning strategy compared to the benchmarks, especially when looking at risk-adjusted return - which is all that matters in the end.

Sorry for the buffoonery

I knew those numbers didn't look right don't know what happened so I went back to
http://stockcharts.com/h-sc/ui

and got 140 day at 1459
350 day at 1449

which is still having discrepancy albeit very much smaller.

The mistake was that the period of the chart needs to be "daily" it was set to "weekly", I suppose if I wreck my brain I could figure why this causes such a hugh difference but its a free service can't complain. There is still a small deviation from your numbers any ideas other than "you get what you pay for" possibly trading days maybe 20 WMA doesn't trnslate to 140 day or 50 WMA to 350 day

Try a weekly chart with two MA lines on it - 20 WMA and 50 WMA.

It'll work, and its what you want anyway - you don't want whipsaws, so you intentionally ignore actions less than one week in duration.

Those charts @ stockcharts.com don't allow for those selections (or I'm missing something) only x days maybe you could suggest a better site that has 20 & 50 week Moving Average

Uh, how about virtually any brokerage?

Genesis, continuing your thoughts on best "long term" strategies, what is your perspective strategy-wise (e.g. asset allocation) as you hit 50 years old and are looking at 10-15 years to retirement taking into account the current macroeconomic environment as so well laid out in your various tickers over the past many weeks?

Thanks.

IMHO you can't be in equities right now as a long-term investor.

You got a DOW Theory SELL signal late last year, and now have one on the "simple and easy" MA signal, so that's 2 for 2.

Therefore, you park in a treasury-linked money market.

Normally the advice you'd get is to be about 25% in fixed income at that age. The problem with this advice right now is that the only "safe" fixed income at present is treasuries, and you DO NOT want to be anywhere near the long end of the curve right now, as you could get totally destroyed if the government credit markets rocketshot on yield - and they may.

This is an odd time; I am retired and living on my portfolio, and I am 100% in short-term treasuries and equivalents, other than my trading account.

The yield sucks but losing your capital sucks worse!

Thanks G. That's where I'm parked at this point. I am also retired and living on my portfolio. Would totally agree that return of capital is of greater importance in the current environment than return on capital.

Gen- love your posts. thanks for all the hard work. I'm in short duration treasuries and treas. MM for most of my money. However, I have pretty large positions in the following: SRS, SKF, TWM, DXD, SDS and GLD. Right now, I'm break even on everything but GLD where I have a nice gain. Any thoughts on these ETFs? I'm also thinking about shorting TLT. Your input is appreciated.

Just watch the technicals.... I don't do specific advice.... ain't in the biz!

KD

Thank you for your replies, the free tutelage you offer is outstanding, as I mentioned I am not a trader and as such not a chartist either, but that is no excuse for simply not reading the directions it appears even at stockcharts that once a "period" is chosen that the overlays of SMA (Simple Moving Average)switch to that period. I over-thunk it. To those here and I doubt there are many that don't have a trading account the Stockcharts free site works just fine and it really is as simple as choosing a weekly period for the $SPX clicking on the moving average calc in the upper left then scrolling down to set the overlay which if the period is weekly the MA will also be weekly. It seems that you can set up to three overlays not that that is necessary for this example. I get it that this is elementary for the probably every one here but there seemed to be one other person interested in the mechanics of getting this done.

Sorry to clutter the board should have spent more time researching before posting, it has been my experience that threads have a finite life so if one harbors a thought best to get it out there while interest in the thread is hot.