Monday, April 4, 2016

Money Management Model Transitions to 100% Invested

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Note, I will be in San Antonio, Texas from April 5 through (potentially) April 10th.  If you are in the area let me know by calling/texting my cell or sending me an email (leave a message below if you have neither and I'll contact you) and if schedule allows, I would enjoy meeting face-to-face.

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If you want to be on the newsletter distribution, then please send an email to GreekGodTrading [ a t ] gmail {d o t] com, making the appropriate changes to the email address, with the word "NEWSLETTER" in the subject and I'll add your email.  I also ask that you subscribe to this list using the link to the left (if you are on the blog), as it's the only way I can communicate with Dropbox and newsletter users, if the need arises.

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From a broad perspective, my timer model is indicating that I should target full investment of all funds:


Friday, April 1st's action indicates that all my timers -- short, intermediate, and long are now back on the "long" side.  Despite the overbought region of the markets, the trend upward (or at least horizontally) is intact and there is nothing except our own fear of being overbought that is keeping us out of the markets.

The Cumulative Tick chart reinforces this position:


The top portion of this figure shows the number of stocks hitting a new 52-week high (green) compared to those hitting a new 52-week low (red), and the net (yellow).  You can see the strength in this market – green is well above red for the entire week.

The middle portion of this figure shows algorithmic buying.  I presently have it set to 500 stocks per minute on the NYSE.  When algorithmic buying occurs, 500 stocks (or more) per minute tick upwards in price and this is recorded as an advance upward.  When algorithmic selling occurs, 500 stocks (or more) per minute tick downwards in price and this too is recorded.  Continual advance upward of this line shows solid, sustained buying.  Horizontal advance shows lack-luster buying/selling, and continual decrease downward of this line shows solid, sustained selling.  Tuesday’s action shows a great example of the market reaction to the FOMC’s statements – heavy buying after Ms. Yellen make her remarks, and it was followed on Wednesday.  Thursday and Friday were relatively quiet.

The bottom portion of the figure shows a moving average ribbon of the cumulative tick.  Essentially, when the white trace (real-time) is above the solid red (longest moving average – about 3 days in length), we are in a short-term uptrend.  You can see that the white trace did not make much leeway upwards on Thursday / Friday, so the gains of Tuesday and Wednesday were being digested.

 As long as the white trace is above the red trace in the Cumulative Tick plot, the market trend is upward, at least on a short-term basis.

Personal Holdings:

My own holdings are showing a topping behavior:


You can see that the MACD presentation is already rolling over for this set of stocks.  Note that I purchased this set of stocks between late January and early February – review the MACD and price levels during those periods and compare to those that we are seeing today.

Strategy

My strategy for the week is as follows:
  1. I have alerts set on all stocks that I presently own that I would like to add to.  The alerts are real-time and trigger on present price as well as forecasted volume.
  2. I presume the up-trend will continue, until it doesn't.  I am in buying mode on alerted stocks, but I am sitting on the sidelines for stocks that do not meet price AND volume criteria.
  3. I am reviewing selling cash-secured puts on liquid contra ETFs for April expiration.  While volatility drops prices for options are dropping too, which improves metrics.
  4. I am reviewing selling cash secured puts on quality stocks that I wouldn't mind owning at a lower price.  Many stocks have moved higher in this market, and I missed some of the action.  Selling a CSP will allow me to collect a premium and if put to me, would allow me to purchase the stock at a lower price.
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Stock updates are posted in a daily file that I attempt to share by the following morning with all subscribers. To review the stocks that you are holding and see how I evaluate them, you need to be a member of my Dropbox.  Send an email to GreekGodTrading [ a t ] gmail {d o t] com, making the appropriate changes to the email address, with the word "DROPBOX" in the subject and I'll add your email.  I also ask that you subscribe to this list using the link to the left (if you are on the blog), as it's the only way I can communicate with Dropbox users, if the need arises.

Here's how to find me:

InvestFeed/Twitter:  grems8544
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As with all my ramblings, you are responsible for your own investment decisions and I am not.  Please do your own diligence, and please take ownership for your actions.

Regards,

pgd