Month: December 2013

The market shows every sign of topping. One of the interesting signs is the number of initial program offerings. The Wall Street Journal reported last month that “Investors are stampeding into initial public offerings at the fastest clip since the financial crisis, fueling a frenzy in the shares of newly listed companies that echoes the technology-stock craze of the late 1990s.” However the market can show signs of topping for a long time before it starts to decline. I think this is all fueled by the Fed printing 75b dollars each month. Yes it is down from 85b but 75b is still a big number. So the Fed is throwing money at the market and keeping short term interest rates low. Someday the market will say “enough” and we will see 1987, 2000, 2008 again.

I was watching a series of tax experts on the Willis Report talking about the impact of all the new taxes this year on their clients. One CPA said that his firm’s 1200 very high income clients would be paying 50% more in taxes when their 2013 taxes are filed. My first thought was where are they going to find the money – probably sell stocks and bonds. My second though was since taxes are up so much for them, what will they no longer do in 2014 – probably slow down investing and spending. And more taxes are coming – http://nypost.com/2013/12/25/new-obamacare-fees-coming-in-2014/. The future does not look bright and looks expensive.

Last week I sold JapanSmallerCompanies, waiting a week beyond my normal sell signal to avoid a 1.5% fee and because December is generally an up market. This time it worked out well. I avoided the fee and the sell price was a percent or so higher than the price a week before. 

The sum of the deviations (909,682,911,1018) is up for the last two weeks. The DJ Wilshire 5000 index is above its 50 day moving average and the average is increasing.
I have been investing my IRAs in Fidelity for over 30 years. Initially I just purchased the best fund without regard to the market direction. However, about 75% of all stocks move with the market, I decided to use the sum of the deviations as an indicator of market direction. Later I decided to add the DJ Wilshire 5000 index as a second indicator. In reviewing the last 10 years, the use of these these indicators has caused a couple of undersible consequences. The “sum” has kept me from buying when the market is slowly trending upward. The “5000” has kept me from buying at major market turns. Therefore, I’ve decided I will use the Investors Business Daily The Big Picture’s Current Outlook as the sole criteria in determining when to invest. When the outlook is uptrend, I will buy. Otherwise I will not. I will still only buy or sell a fund based on the same criteria I previously used based on each fund’s prices.
IBD TBP’s Current Outlook is “Confirmed Uptrend” – time to invest.

My current investments:
SAutomotive has a price of $56.05, a sell price $53.25, a relative rank of 42, and will be sold when I need to exchange it for another fund or it passes the sell price.
Nordic has a price of 44.54, a sell price 42.31, a relative rank of 01, and is a hold.
SSoftware&ComputerServices has a price of 118.02, a sell price TBD, a relative rank of 02, and is a buy.

My portfolio changes this weekend:
IRA #1 – Invest 100% in Nordic exchanged from SAutomotive
IRA #2 – Invest 20% in SSoftware&ComputerServices

My portfolio market exposure after this weekend’s changes
IRA #1 – 100% invested
IRA #2 – 60% invested

I would like to take this opportunity to wish you and yours a Very Merry Christmas. During this time of giving, if you feel you have enough money to give to others, I would like you to perhaps consider one of the following for a gift:
www.fisherhouse.org provides houses next to major military facilities in which relatives can stay while our injured military heroes are provided medical care.
www.kiva.org provides micro loans to help small entrepreneurs in developing countries.
www.worldvisiongifts.org provides support to children and families world wide in many ways including giving farm animals to families.
www.yadeliezer.org provides food and other relief the those in poverity in Israel – yes we have poverty in the US, but I think Israel is probably our best ally, doing a lot of work the US should be doing in a very unstable part of the world, and the US is them treating Israel like dirt.
www.charitynavigator.org is a charity evaluation and information site which can provide information about these and other charities.

Investors Business Daily changed their Market Outlook to confirmed uptrend this week. In preparing the numbers for today’s list of mutual funds I noticed that some funds went down excessively on Friday. In talking with Fidelity they admited that those funds had paid distributions but Fidelity had not reported the distributions on their web site. Fidelity does not know when the corrected list will be available.

The sum of the deviations (909,682,911) is not up for the last two weeks – not a time to invest.
The DJ Wilshire 5000 index is above its 50 day moving average and the average is increasing – time to invest. Both trends are not up – not a time to invest.
 

My current investments:
SAutomotive has a price of $55.21, a sell price $53.10 (adjusted for a distribution), a relative rank of 43, and will be sold when I need to exchange it for another fund or it passes the sell price.
JapanSmallerCompanies has a price of $13.05, a sell price of $13.22, a relative rank of 98, and is a sell. It closed the week at the same price it was last week but now I have owned it 90 days and can sell it and not take a 1.5% hit.
Nordic has a price of 43.33, a sell price 41.16, a relative rank of 04, and is a hold.
My portfolio changes this weekend:
IRA #1 – None
IRA #2 – Sell JapanSmallerCompanies

My portfolio market exposure after this weekend’s changes
IRA #1 – 100% invested
IRA #2 – 40% invested

December has the highest average monthly gain (1.7%) for the S&P500 with 47 up months and 12 down months since 1950.
December has the second highest monthly gain (2.0) for the Nasdaq with 24 up months and 17 down months since 1971. The highest average monthly gain for the Nasdaq is January (2.9%).

Investors Business Daily changed their Market Outlook to Uptrend under Pressure this week. That suggests that investors should protect their profits and perhaps not make any new investments. 50.16% of the stocks in the Nasdaq index are above their 50 day moving average. That is the lowest weekly number since April. It would be nice to have a December up month like the Nasdaq had in 1999 – +22.0%. However the next year, 2000, was not a good year – -39.3%. Peter Bruno, www.peterbrunomedia.com, is still calling for a DJIA top of 16000+/- before a decline, and is also suggesting the bottom for gold is here. Another cloud over the market is the number of bearish investors – only 14% which is a record low for the last decade – suggesting a correction is close.

The sum of the deviations (1014,909,682) is not up for the last two weeks – not a time to invest.
The DJ Wilshire 5000 index is above its 50 day moving average and the average is increasing – time to invest. Both trends are not up – not a time to invest.

My current investments:
SAutomotive has a price of $55.91, a sell price $53.94, a relative rank of 10, and is a hold.
JapanSmallerCompanies has a price of $13.05, a sell price of $13.22, a relative rank of 87, and is a sell, however the short term sell fee is 1.5% and if I hold it one week more I will not have to pay that. I do not have a clue if the market is going to be up next week, but December has the best average monthly gain for the S&P500 and the second best for the Nasdaq.
Nordic has a price of 41.62, a sell price 40.40, a relative rank of 10, and is a hold.

My portfolio changes this weekend:
IRA #1 – None
IRA #2 – None

My portfolio market exposure after this weekend’s changes
IRA #1 – 100% invested
IRA #2 – 60% invested

A very interesting video from Freedom Fest on the state of the nation – http://reason.com/reasontv/2013/11/01/freedomfest .

I was talking with a friend the other day who, while invested in mutual funds, did not like ETFs. ETFs are just better mutual funds. In fact, Fidelity in October launched 10 sector ETFs. They inclued Consumer Discretionary, Consumer Staples, Energy, Financial, Health Care, Industrials, Information Technology, Materials, Telecommunication Services, and Utilities. Fidelity has set up a FAQ on their web site – https://www.fidelity.com/etfs/sector-etfs/sector-etf-faqs . Commission free if you hold them 30 days, management fee about 10% of what Fidelity mutual funds charge, sell at anytime during the day, set up stop loss orders to limit losses, etc. All in all ETFS are just better mutual funds.

Investors Business Daily says the Current Outlook is “Confirmed Uptrend.” However they also say “Investors Should Trim Sails When the Market Turns Choppy.” Peter Bruno’s radio show which I follow generally from the archives on peterbrunomedia.com. He has been claiming for some time that 16,000+/- on the DJIA is the end of the current uptrend. His show is mostly commercials for his investment letters, but he has been pretty good on suggesting where the market is going based on his market cycles. His longest term cycle topped in 2000 which he says started the decline of the US in general.

The sum of the deviations (11031,1014,909) is not up for the last two weeks – not a time to invest.
The DJ Wilshire 5000 index is above its 50 day moving average and the average is increasing – time to invest. Both trends are not up – not a time to invest.
The market was up slightly, but the calculation of the deviation from an exponentially smoothed moving average requires more than a slight increase. All in all it looks like the uptrend has stalled.

My current investments:
SAutomotive has a price of $56.60, a sell price $53.94, a relative rank of 12, and is a hold.
JapanSmallerCompanies has a price of $13.34, a sell price of $13.22, a relative rank of 80, and is a hold until I need the money to invest in a better fund or if falls a little more.
Nordic has a price of 42.29, a sell price 40.40, a relative rank of 05, and is a hold.
Sell price of JapanSmallerCompanies was adjusted for a distribution of $0.328 and Nordic was adjusted for a distribution of $2.626.

My portfolio changes this weekend:
IRA #1 – None
IRA #2 – None

My portfolio market exposure after this weekend’s changes
IRA #1 – 100% invested
IRA #2 – 60% invested