Author: Flynn

Monday after the market close, Investors Business Daily changed The Market Outlook to “Uptrend Under Pressure” and then on Wednesday evening IBD changed it back to “Confirmed Uptrend”. The market is over due for a correction of at least 10% but until the market decides to ignore the money the Fed pumps into the market, the correction probably will not happen.
On 15Jan14 in IBD’s The Big Picture column they revisited some of John Templeton’s comment – he passed away in 2008. “Legendary investory John Templeton said there are four phases to a bull market. Bull markets are ‘born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.’ What part of the game are we in now? Most market watchers would probably argue that this game is in either the third or fourth quarter. Euphoria hasn’t stepped into the field. The difficulty is that things happen fast in the euphoria phase.”

IBD TBP’s Current Outlook is “Confirmed Uptrend” – time to invest.
SBiotechnology is still in a strong uptrend. A little scarey, but the numbers say buy.

My current investments:
SAutomotive has a price of $56.18, a sell price $53.51, a relative rank of 45, and will be sold when I need to exchange it for another fund or it passes the sell price.
Nordic has a price of 45.00, a sell price 42.75, a relative rank of 05, and is a hold.
SSoftware&ComputerServices has a price of 120.23, a sell price 114.22, a relative rank of 04, and is a hold.
SAirTransportation has a price of 61.83, a sell price 58.74, a relative rank of 03, and is a hold.
SBiotechnology has a price of 207.44, a sell price TBD, a relative rank of 01, and is a buy

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

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

On Thursday the biotech stock Intercept Pharmaceuticals (ICPT) went up 281% after drug trials proved successful, it went up another 61% on Friday, and is up 500% for the week. The company has never had a profit. The market capitalization of ICPT is 8.62b, last year it had 2m in sales, and the price to sales ratio is 3289.26. Some other companies price to sales ratios are: DIS 2.92, HRB 2.81, UTX 1.67, BA 1.25. Obviously this is a bubble in biotechnology stocks. My only suggestion is you make sure you get out quickly when the bubble bursts. SBiotechnolgy was up 2% on Tuesday, 2% on Wednesday, 5% on Thursday, and 4% on Friday.

IBD TBP’s Current Outlook is “Confirmed Uptrend” – time to invest. Obviously anything related to biotechnology had a strong weekly uptrend, but my highest rated fund whose deviation from a 39 week smoothed moving average has increased for two weeks is SAirTransportation.

My current investments:
SAutomotive has a price of $56.33, a sell price $53.51, a relative rank of 45, and will be sold when I need to exchange it for another fund or it passes the sell price.
Nordic has a price of 44.97, a sell price 42.72, a relative rank of 06, and is a hold.
SSoftware&ComputerServices has a price of 119.08, a sell price 113.13, a relative rank of 04, and is a hold.
SAirTransportation has a price of 61.78, a sell price TBD, a relative rank of 03, and is a buy.

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

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

So I received a call yesterday from someone who really reads my weekly email. He was thanking me for making him so much money. It turns out he sold SBiotechnology when I did, but decided to buy it again and it did great for him. Sometimes I am correct, and then there are other times. One of the lists on my web site is a list of the top 20 funds for the last 78 weeks – I use 39 weeks for my investing and publish it in my email. It turns out that SBiotechnology has been on the list of the top 20 funds for 78 weeks for the last 111 weeks.
The biggest contributors to the crash in 08 was the housing market and the bad mortgage loans which were allowed. The joke was that you could get a loan to buy a house if you had a beating heart. Turns out that since the Senate voted to allow approval of presidential appointments by a simple majority, Representative Mel Watt was confirmed and will be sworn as director of the Federal Housing Finance Agency. Back in 02 in his district in North Carolina he pressured Freddie to dole out home loans to “Welfare Recipients.” His current plans are to relax underwriting rules so “disadvantaged” borrowers lacking credit and down payments can buy homes. You have been warned, here it comes again.

IBD TBP’s Current Outlook is “Confirmed Uptrend” – time to invest. However, not one of my top twenty funds has had a percent deviation increased each week for the last two weeks. The highest ranked fund which has an increasing percent devaiation over the last two weeks is SFinancialServices, the number 23 best fund.

My current investments:
SAutomotive has a price of $55.38, a sell price $53.25, arelative rank of 58, and will be sold when I need to exchange it for another fund or it passes the sell price.
Nordic has a price of 44.50, a sell price 42.31, a relative rank of 01, and is a hold.
SSoftware&ComputerServices has a price of 117.62, a sell price 111.74, a relative rank of 02, and is a buy.

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

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

Some of the 401k, 403b, etc. plans are changing for the better. HRBlock’s has a brokerage option where employees can invest in any mutual fund. I asked the custodian to tell HRB they need to add ETFs. HRB also is changing all of their funds from Fidelity to Vanguard. My feeling is that HRB has the Bogle disease – fees are the only number which counts in investing. My attitude has always been the only important number is the gain and I do not care what the fees are if I received the highest gain. The State of Florida, in their self directed retirement plans, is offering all the non-leveraged ETFs. The local school board, while offering a dozen loaded annuities and funds, also offers two noload mutual fund companies and a Roth as well as a Traditional 403b.

Investors Bisiness Daily says the Current Outlook is “Confirmed Uptrend.” However it goes on to say “The market appears to be near a tipping point. If the indexes notch a few strong up days from here, the distribution count could shrink in a hurry. But if the indexes head south in rising volume, the uptrend has little wiggle room.” In a couple of small investment portfolios where I have a few ETFs and stocks, I have verified that there is a stop loss order for each position at 8% below the lastest high.

The sum of the deviations (1060,1031,1014) 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.
Next Friday Fidelity mutual funds start their annual distributions. Unless you want to purchase more shares of the funds you own, you should instruct Fidelity to keep all distributions in cash and not reinvest. I do that and at this time would not want to buy more shares.

My current investments:
SAutomotive has a price of $56.78, a sell price $53.94, a relative rank of 12, and is a hold.
JapanSmallerCompanies has a price of $13.73, a sell price of $13.56, a relative rank of 77, 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 45.17, a sell price 42.91, a relative rank of 04, 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

CNBC replayed a TV show they created in 2009 called the “Bubble Decade.” If you get the opportunity, it is worth watching. One of the interviews featured Michael Wolff (journalist) and Mark Cuban(investor). Wolff said he hoped the next bubble was coming and Cuban said the next bubble was coming. Neither gave a timeframe. However, if you watch the market you can see signs that it is coming. One signs is a 3d printing stocks which doubled over the last 2 weeks and then fell by half. Look at a chart of VJET. VJET, like the other 3d printing stocks, has never had a profit.

Investors Business Daily featured an article on 19Nov called “Delta Uses Relative Strength ETFs To Beat The Market.” It featured the method Delta Investing Management uses to invest. From 03/07 through 9/13 it has had an average annual gain of 24% vs the S&P500 (with dividends) gain of 5%. The article suggested you could do the same by following the S&P500 equal weighted EFT RSP and buy when the price was above the 75 day moving average and sell when it was below. The two ETFs Delta buys are PDP and DWAS. PDP is rebalanced quarterly by investing in the 100 highest relative strength mid and large cap stocks. DWAS is rebalanced quarterly by investing in the 300 highest relative strength low cap stock.
 
The sum of the deviations (913,1060,1031) 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 $56.44, a sell price $53.62, a relative rank of 13, and is a hold.
JapanSmallerCompanies has a price of $14.05, a sell price of $13.56, a relative rank of 33, 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 44.18, a sell price 41.97, 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

Investors Business Daily after a week where the current outlook was “uptrend under pressure” changed the current outlook on Wednesday to “Uptrend resumes.” That is an indication that it the general market is trending up.

Wealthtrack is a weekly TV and web show by Consuelo Mack. Her show from 04/05/2013 (yes I am a little behind on listening to some of her shows) features Harold Evensky with a strategy to make your retirement savings last. The Employee Benefits Institute had just released a survey indicating almost 50% of workers are not confident they will have enough money for a comfortable retirement – debt is listed as the biggest problem by 55% of the workers. The show can be viewed or listen to on the web at www.wealthtrack.com. Just click on the show date where the description is “Harold Evensky: Afraid of Outliving your Retirement Savings?” The previous show with Robert Shiller is also interesting.

 The sum of the deviations (974,913,1060) 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 $56.28, a sell price $53.47, a relative rank of 08, and is a hold.
JapanSmallerCompanies has a price of $14.00, a sell price of $13.56, a relative rank of 29, 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 43.90, a sell price 41.91, a relative rank of 09, 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