Wednesday, July 1, 2015

On the edge of the cliff - Close of markets July 1st

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I'm on a train heading back from a wonderful wedding in NYC -- so this will be short and not have any graphics.

With the close of markets today my system is calculating a move to cash -- all of it.  There are caveats though, so let me explain:

1) We are very, very oversold here.  Not extreme, as once-in-a-lifetime oversold, but enough to tell me I should be getting my shopping list together.  We're at a level that has only occurred 3x in the past 2 years, putting it in context.

2) Not all of my "go-to-cash" indicators are confirming.  I use several, and I typically (for backtesting rules) require that they all are heading in the negative direction.  They aren't.  Hence, we have an internal war going on.  I have one of many indicators that is now south, which at a minimum is a warning shot across the bow.  A serious warning shot.

3) Of significance is that a) average volume is up, b) no real progress is being made in the cumulative tick (it's horizontal, not moving up, but not moving down), and c) the long-cash ratio actually moved up a tad with today's action.

The indicator that has historically kept me out of trouble is a very simple one and my crystal ball tells me it may whipsaw back to the "get invested" side, perhaps this week, and probably violently if some sort of Greek deal is worked out.  It literally is the difference of two exponential moving averages -- the 13d and 65d, and right now the 13d is below the 65d.

Again, I don't think that it's going to last.

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Strategy -- relatively simple.  I'm already working to maintain 66%-ish cash in my leader's portfolio, and I'll continue to do so on Wednesday.  The portfolio can be viewed in real time here:

https://www.collective2.com/details/94921209

As far as my dividend portfolio, I bought two of three stocks today and will try to get into the 3rd one on Wednesday.  The dividend portfolio is targeting being 100% invested (it's goal is income, with price appreciation being secondary), and I've filled 24 of 25 positions.  The portfolio can be viewed in real-time here:

https://www.collective2.com/details/94780986

So, no changes, I'll start working on the shopping lists and will post them in the Dropbox folder.

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Standard disclaimers apply, as usual.