· A bus station is where a bus stops. A train station is where a train stops. On my desk, I have a work station.
O, O !!, as in 2000. Last week I talked of triple tops - this week, courtesy of my frequent John Mauldin email (everyone should get this-Google it), he cites a double top in IPOs with negative earnings - the second peak since 'Oh,Oh. Yet another caution light.
In what I call a Lance Armstrong market - juiced up on EPO/FED, the market just keeps setting new records in most indices. Breadth, via Advances and Declines, new highs, etc. is strong - sellers, including Insiders, margin interest, even gold commercials (Commitment of Traders, or COT) are diminishing under this momentum drive. Large SPX traders have overtaken small traders slightly.
The caution flags are the VIX, below a support level of 12, where charts show many spikes subsequent to that penetration; the Investors Intelligence Bulls are more than 3 times the Bears. Plus, I repeat, June is not the greatest month in a mid-term election year - nor is October.
Lest the reader "j'accuse" me of speaking out of both sides of my mouth, IMO the wise choice now would be to hold positions and wait for some kind of correction to add new - but to HEDGE the markets in some way. This can be done with Inverse ETFs, such as SDS or DXD for blue chip portfolios, or put options if one has basic option approval. One current way is to employ a VIX call spread (it rises when stocks fall, as seen above) . A July 14 by 18 long call spread would get one through June, with a 6:1 profit/loss ratio.
At a recent family function I advised some of the younger generation who are just starting out in careers, but with little interest in market timing - but wanting to invest for the future (in lieu of the massive debt to fall on their shoulders). My advice to them for the long term is to put savings away in Index funds - either mutual (specifically Vanguard or even Schwab), or ETFs. one in three households won an Index fund - Vanguard has $2T assets under management, being the founder of Index funds under John Bogle. With the lowest of fees, they should at least compare favorably with the overall market, which is the best performing asset class over time - more than bonds, real estate, gold, etc.
Index ETFs could include the SDY, which contains dividend stocks which have raised dividends regularly, the RSP - an equal weight Index (not dominated by the big boys such as APPLE, IBM. The RSP has gained an annual 26%/year over 5 years, 24% last year, and even 9% over the past ugly 10 years.
Although I mentioned the fundanalyzer.com recently, which shut down right after I mentioned it - one might be able to back door it and compare up to 3 funds at a time for fees and performance with: http://apps.finra.org/fundanalyzer/1/fa.aspx
(I hope this works). The Vanguard VFINX has earned an annual 11% since 1976, 21% in the past year; 14 1/2% over 3 years and 7% over 10 years.
Contribute regularly, reinvest dividends, and forgettaboutit for decades.
The local technical society - TSAASF jointly with the International IFTA is presenting an online Webinar this week:
Next IFTA Webinar:
Date/Time: Thursday, 5 June 2014; 12:00 PM - 1:00 PM EDT (Eastern Daylight Time)
Topic: Identification of High Probability Target Zones
Presenter: Andrew J.D. Long, MFTA
To view the webinar info, go to the IFTA website.
About the presenter
Andrew J.D. Long, MFTA is a professional technical market analyst, publisher & editor of TRIGGER$.ca.