Author: Flynn

This week the federal reserve board, and its counterparts around the world, decided the market needed more liquidity and so continued to buy securities. The FED has a meeting coming up this week, and with the election less than two weeks away will do nothing to disrupt the uptrend. My concern is for the market after the election. Historically November is the start of the growth season. Additionally, on average, the best two years of any presidential term has been the last two years.

IBD TBP’s Current Outlook is “Confirmed Uptrend” – time to invest.

My current investments:
SUtilities has a price of 76.11, a sell price 72.30, a rank of 09, and is a Hold.
SPharmaceuticals has a price of 21.62, a sell price 20.71, a rank of 06, and is a Hold.
SBiotechnology has a price of 227.22, a sell price TBD, a rank of 01, and is a buy.
SBiotechnology is obviously an extremely speculative mutual fund.

I noticed an error in last week’s note. In my current investments, I indicated I would not sell SPharmaceuticals since I had not owned it for 30 days. In my portfolio changes I indicated I was selling it. Sorry for the confusion, I did not sell it.

My portfolio changes this weekend:
IRA #1 – Buy SBiotechnology
IRA #2 – Buy SBiotechnology

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

Wednesday when the Nasdaq was down more than 3% a member of the federal reserve board decided to discuss the possibility that the FED should consider reversing its decision to quit purchasing securities and the Nasdaq stopped the decline and started going up. I expect the FED will continue to talk the market up. The Nasdaq declined below its 200 day moving last Friday and remains below it. The crossing of the 200 day moving average is often an indication of a declining market. An interesting note on my list of top 20 funds is the fact CashReserves, which never goes up or down, is #18.

IBD TBP’s Current Outlook is “Market in correction” – Not a time to invest. The downtrend continues. SHealthCare was down 3%, SPharmaceuticals was down 2%, and SUtilities was down 1%.

My current investments:
SHealthCare has a price of 208.22, a sell price 211.32, a rank of 04, and is a Sell.
SUtilities has a price of 73.12, a sell price 71.68, a rank of 10, and is a Hold.
SPharmaceuticals has a price of 20.44, a sell price 20.71, a rank of 09, and would be sold if I had owned it for 30 days. To sell it before 30 days violates on of Fidelity’s dumb rules.

My portfolio changes this weekend:
IRA #1 – none
IRA #2 – Sell SHealthCare

My portfolio market exposure after this weekend’s changes:
IRA #1 – 00% invested
IRA #2 – 40% invested

Monday the market was down a little, Tuesday it was down a lot, Wednesday the market started down, and then about 2pm the Federal Reserve Board suggested that due to slowing global growth they were not going to raise interest rates yet and the market reclaimed most of its loss this week. Thursday the market was down big and Friday it was down again. We may be at the place where the market starts ignoring the Fed. That would be a bad sign since the market has been held up by the liquidity the Fed has been providing. Currently the Fed has a balance sheet of 4.4T in investments it has purchased to provide liquidity. Imagine the market when the Fed finally sells all its 4.4T. I just cannot see the market going down anymore before the election because a down market is bad for those in power.
Consuelo Mack’s program Wealthtrack featured Nancy Lazar on 03Oct. Ms. Lazar explained why the US is the driver of global economic growth and suggested that to profit from this growth an investor should buy UUP – an ETF which follows the value of the US dollar. UUP is up 6% for the 3 months.
Doug Fabian produces a weekly podcast where he discussed the weekly market events fraturing recommendations on ETFs. On his web site you can sign up for his free weekly e-newsletter. Lately in one of the segments on his weekly podcasts he has been discussing three aspects of the Obama legacy. One aspect is on the continuing increase in taxes (scheduled to increase for at least the next 6 years), a second is on the inability to continue to fund new programs (obamacare and others), and the third is on the requirement to reduce entitlement payments (social security, medicare, etc.).
Gary Kaltbaum, www.garyk.com, has a nightly radio show you can replays on his web site. On his 10/10/14 show he said the latest market actions look like a repeat of 2007.

IBD TBP’s Current Outlook is “Market in correction” – Not a time to invest. This was one of my worst weeks ever. SBiotechnlogy was down 7%, SElectronics was down 10%, SHealthCare was down 4%, SUtilities was down 2%, and SPharmaceuticals was down 4%

My current investments:
SBiotechnology has a price of 204.26 a sell price 208.07, a rank of 06, and is a Sell.
SElectronics has a price of 69.97, a sell price 76.99, a rank of 90, and is a Sell.
SHealthCare has a price of 213.66, a sell price 211.32, a rank of 01, and is a Hold.
SUtilities has a price of 73.59, a sell price 71.68, a rank of 09, and is a Hold.
SPharmaceuticals has a price of 20.93, a sell price 20.71, a rank of 02, and is a Hold.

My portfolio changes this weekend:
IRA #1 – Sell SBiotechnology
IRA #2 – Sell Sbiotechnology and SElectronics

My portfolio market exposure after this weekend’s changes:
IRA #1 – 00% invested
IRA #2 – 60% invested

September was not a profitable month. In September my 5 portfolios, IRA#1 -1%, IRA#2 -1%, PDP PIE PIZ DWAS -3%, TQQQ -6%, TQQQ/SQQQ -10%. For the last 3 months, IRA#1 +1%, IRS#2 -4%,  PDP… +0%, TQQQ +5%, TQQQ/SQQQ -5%.
September portfolio changes:
IRA#1 – None.
IRA#2 – Purchased SHealthCare on 09/02, SUtilities on 09/08, and SPharmaceutical on 09/22.
PDP PIE PIX DWAS – Sold DWAS on 09/22 when the 3 month gain turned negative and purchased DWAS. Current positions are Cash 51%, PDP 33% and PIE 16%.
TQQQ – Sold half TQQQ on 09/16, purchased half TQQQ on 09/19, sold half TQQQ on 09/23.
TQQQ/SQQQ – Sold TQQQ on 09/16, purchased TQQQ on 09/19, sold TQQQ on 09/23.

My investing rules for these portfolios are on my web site:
1 – for funds https://www.flynndj.com/my-iras/fund-evaluation-method/
2 – for ETFs https://www.flynndj.com/7-etf-investment-study/

An interesting ETF was started this week. DWAT invests in the best performing ETFs within the best performing asset class. The fund can be invested in 100% US Equities, Fixed Income, 60% in International Equities, and 30% in Inverse Equity, Currencies, Commodities, and Real Estate. Currently it is invested 91% in US Equity, 8% in Real Estate, and 1% in cash. A list of its current investments can be view at http://www.arrowshares.com/default.aspx?menuitemid=124. Currently the #1 investment in DWAT is ETF XLV – Health Care Select Sector – at 13% of assets. It will be interesting to watch DWAT assets change as momentum of each asset class and ETF change.

IBD TBP’s Current Outlook is “Market in correction” – Not a time to invest. The change from “Uptrend under Pressure” took place after Wednesday’s market decline. It was not a good
week in the market.

My current investments:
SBiotechnology has a price of 218.77 a sell price 208.07, a rank of 02, and is a Hold.
SElectronics has a price of 77.33, a sell price 76.99, a rank of 06, and is a Hold.
SHealthCare has a price of 222.44, a sell price 211.32, a rank of 01, and is a Hold.
SUtilities has a price of 74.99, a sell price 71.68, a rank of 21, and is a Hold until something better is a buy or it drops below its sell line.
SPharmaceuticals has a price of 21.80, a sell price 20.71, a rank of 03, 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 – 100% invested

This week the percent of Nasdaq stocks above their 50 day average is 34.03% down from 47.15% last week. Generally it is not a good idea to invest in a stock which is below its 50 average and a bad idea to invest in a stock below its 200 day average. The percent of Nasdaq stocks above their 200 day average 38.66% down from 45.05%.
The market is at the end of a quarter and generally funds (mutuals, hedge, etc.) invest any extra cash in stocks they currently own in order to move the price up and make their quarterly returns look better. Another positive for the market is the Federal Reserve Board. Every time the market gets into trouble, one of the members (or a counterpart in Europe, Japan, or China) makes a positive comment. Thirdly, we have an election coming up. No party in power wants the market to be going down into an election. After 1987 23% crash in one day, a plunge protection team was set up to handle the economy in times of economic turbulence and I am sure it is active today. All the indicators indicate we are near a market top, but the politics wins until the market chooses to ignore it.

After Monday’s market decline IBD changed to “Uptrend Under pressure” – not a good sign. The same thing happened last week, except last week IBD changed to “Confirmed Uptrend” on Thursday and Friday. That change lasted for two days.

IBD TBP’s Current Outlook is “Uptrend Under Pressure” – Not a time to invest.

Out of the 130 Fidelity funds I follow, only SChemicals #05, SIndustrials #56, and MunicipalIncome #77 have an increasing deviation from their moving average over the last two weeks which I require before I invest.

My current investments:
SBiotechnology has a price of 219.02 a sell price 208.07, a rank of 01, and is a Hold.
SElectronics has a price of 79.58, a sell price 76.99, a rank of 04, and is a Hold.
SHealthCare has a price of 221.12, a sell price 210.72, a rank of 02, and is a Hold.
SUtilities has a price of 73.92, a sell price 71.68, a rank of 55, and is a Hold until something better is a buy or it drops below its sell line.
SPharmaceuticals has a price of 21.80, a sell price 20.71, a rank of 03, 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 – 100% invested

One of the charts I review is the percent of Nasdaq stocks whose price is above their 50 day average. This week the number closed at 47.15% indicating more than half of Nasdaq stocks are below their 50 day average. The same number for the New York Stock Exchange at 46.24%. The 50 day average of this number for both exchanges has been declining from about 60% to 50% over the last 6 months. Not a positive sign.
TNA – Direxion Daily Small Cap Bull 3X ETF – represents the strength of the smaller capitalization stock stocks stocks while UPRO – ProShares UltraPro S&P500 ETF – represents the strength of the 500 largest capitalization stocks. UPRO is up 7.97% while TNA is down 10.88% over the last 3 months. Thus, while the largest stocks are going up, the smaller stocks are going down. A long term up market requires the participation of all stocks not just the largest.

After Monday’s market decline IBD changed to “Uptrend Under pressure” – not a good sign. After Thursdays market increase IBD changed to “Confirmed Uptrend.” The Nasdaq has 5 distribution days and S&P 500 has 3. Not a good sign but for now the uptrend continues.

IBD TBP’s Current Outlook is “Confirmed Uptrend” – time to invest.

Out of the 130 Fidelity funds I follow, only SBanking #56, SDefense&Aerospace #82, and SPharmaceuticals #04 have an increasing deviation from their moving average over the last two weeks which I require before I invest.

My current investments:
SBiotechnology has a price of 217.37 a sell price 207.96, a rank of 02, and is a Hold.
SElectronics has a price of 80.63, a sell price 76.99, a rank of 03, and is a Hold.
SHealthCare has a price of 221.81, a sell price 210.72, a rank of 01, and is a Hold.
SUtilities has a price of 75.45, a sell price 71.68, a rank of 54, and is a Hold until something better is a buy or it drops below its sell line.
SPharmaceuticals has a price of 21.79, a sell price TBD, a rank of 04, and is a Buy.

My portfolio changes this weekend:
IRA #1 – None
IRA #2 – Invest 20% in SPharmaceuticals

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

Monthly I get an advertisement for “The InvestorsGuide To Fidelity Funds” from Mathew D. Sauer asking me to subscribe to his guide. I don’t. His web site is mutualfundinvestorguide.com and the advertisement contains an offer to view last month’s guide. The August guide in the Fidelity Select Sector Fund Portfolio contains the Fidelity Select funds Pharmaceuticals, Technology, Financial Services, Healthcare, and Industrial Equipment.

On Consuelo Mack’s weekly Wealthtrack show for 12 September several long term indicators were reviewed. All seemed to point to the very high current stock prices. Included in those indicators was the CAPE Ratio – Cyclically Adjusted Price-Earnings Ratio created by Robert Shiller and John Campbell. Three times since 1881 the CAPE Ratio has been higher – around 1929, 1999, and 2007 and Professor Shiller points out that “Major market drips followed those peaks.” As part of her show, Mack always asks the guests for one long term investment and this week the investments were The Buckle Inc, and Schlumberger Limited.

IBD TBP’s Current Outlook is “Confirmed Uptrend” – time to invest. Both the S&P500 and NASDAQ have had three distribution day. The number of distribution days are an indication of major investor selling. A couple more distribution days within the next 3-4 weeks and the Current Outlook will change.

Out of the 130 Fidelity funds I follow, only SBanking, #61, and SDefense&Aerospace, #93, had an incerasing deviation from their moving average over the last two weeks which I require before I invest.

My current investments:
SBiotechnology has a price of 216.94 a sell price 207.96, a rank of 01, and is a Hold.
SElectronics has a price of 79.96, a sell price 76.99, a rank of 03, and is a Hold.
SHealthCare has a price of 218.94, a sell price 207.47, a rank of 02, and is a Hold.
SUtilities has a price of 74.65, a sell price 70.92, a rank of 58, and is a Hold until something better is a buy or it drops below its sell line.

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 – 80% invested

August was a profitable month. In August my 5 portfolios, IRA#1 up 4%, IRA#2 up 1%, PDP PIE PIZ DWAS up 5%, TQQQ up 9%, TQQQ/SQQQ up 1%. For the last 3 months, IRA#1 +8%, IRS#2 -1%, PDP… +8%, TQQQ +25%, TQQQ/SQQQ +17%.
August portfolio changes:
IRA#1 – Sold SElectronics on 8/11 and purchased SBiotechnology.
IRA#2 – Sold Nordic on 08/04, SNaturalGas on 8/04, SAirTransportration on 08/04, STransport on 08/11, SElectronics on 8/11, and purchased SBiotechnology on 8/19, SElectronics on 8/25.
PDP PIE PIX DWAS – Sold PIE on 8/18 when the 3 month gain turned negative and purchased DWAS. Current positions are DWAS 50%, PDP 33% and PIE 17%.
TQQQ – Sold TQQQ on 08/01 and purchased TQQQ on 8/14.
TQQQ/SQQQ – Purchased SQQQ on 08/06, sold SQQQ on 8/14, and purchased TQQQ on 8/14.

My investing rules for these portfolios are on my web site:
1 – for funds https://www.flynndj.com/my-iras/fund-evaluation-method/
2 – for ETFs https://www.flynndj.com/7-etf-investment-study/

I suggest you sign up for the webinar which Gary Kalbaum is offering on 09Sep14 at 4:15pm. If you are busy sign up anyway because he plans to make an archive available. Sign up at www.garyk.com. It is free without obligation, but you will probably, as I have, get a call from them asking if you have questions

IBD TBP’s Current Outlook is “Confirmed Uptrend” – time to invest. Both the S&P500 and NASDAQ have had a distribution day. The number of distribution days are an indication of major investor selling. One is not significant, but four or more are indication the uptrend is ending.

My current investments:
SBiotechnology has a price of 213.87 a sell price 207.96, a rank of #3, and is a Hold.
SElectronics has a price of 81.04, a sell price 76.99, a rank of #1, and is a Hold.
SHealthCare has a price of 218.39, a sell price 207.47, a rank of #2, and is a Hold.
SUtilities has a price of 77.03, a sell price TBD, a rank of #18, and is a buy. SUtilites is the only of the top 20 funds I do not owned which has had an increasing deviation from its moving average.

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

My portfolio market exposure after this weekend’s changes:
IRA #1 – 100% invested
IRA #2 – 80% invested

Chuck Jaffee in his MoneyLiveShow.com podcast for 15Aug featured Sandra Stoutenburg, Senior Market Analysis, for InvesTech Research, www.investech.com. InvesTech’s indicators average a peak about 8 months before the market top. At this time the indicators do not definitively indicate a coming market top. They do not catch an immediate market drops but generally indicate major market tops. Right now InvesTech feels the market is in the last 1/3 of the current bull market. They are, however, watching their indicators closely. They are concerned about the level of margin debt, and the divergence of the major market indexes. 
Back in 1999 anything which said .com in its name went to new highs before the peak and crash. The market today looks like anything having to do with biotechnology is going to new highs.  

IBD TBP’s Current Outlook is “Confirmed Uptrend” – time to invest.

My current investments:
SBiotechnology has a price of 218.90 a sell price 207.6, a rank of #1, and is a Hold.
SElectronics has a price of 80.47, a sell price 76.45, a rank of #2, and is a Hold.
SHealthCare has a price of 218.70, a sell price TBD, a rank of #3, and is a buy.

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

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

Since IBD TBP’s Current Outlook went to “confirmed Uptrend” the uptrend has continued. IBD points out that the uptrend in February to March lasted four weeks and the April to July uptrend lasted 11 weeks. From a longer point of view, I have suggested to some more conservative investors that they buy SPY, the S&P 500 ETF, and hold it until the 200 day moving average declines, then switch to cash, and when the 200 day moving averages starts to increase again, buy SPY back. If you invested using this method you latest buy would have purchased SPY in Feb 2012 and you would be still invested today.

IBD TBP’s Current Outlook is “Confirmed Uptrend” – time to invest.

My current investments:
SBiotechnology has a price of 207.48 a sell price 197.11, a rank of #5, and is a Hold.
SElectronics has a price of 79.88, a sell price TBD, a rank of #1, and is a buy.
It is sort of interesting that the only fund in my list of top 20 funds I would not buy this week is SBiotechnology because the deviation from a 39 week exponentially smoothed moving average has not increased for the last two weeks.
SElectronics was a sell on 08Aug when it 0.03% below 5% off of its weekly highest close. I would have been better off not selling it. In this case the 5% sell line cause me to sell too soon, but then it also could have continued to decline. It is interesting that if you use to 50 day moving average as a sell line which I metioned that Gary Kaltbaum does in last week’s email, SElectronics would have been sold sooner.

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

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