LOL!'s Market Timing Newsletter

[aja8888]

My purchase on 10/29 of a bond fund has not worked out at all. Not much I can do about it though.

Is this a market reaction to the word that the Fed may raise interest rates in December?

 

[LOL!]

Is this a market reaction to the word that the Fed may raise interest rates in December?

Yes, I think so.

Bond funds seem to go up and down by at least half-a-percent all the time, but a 1% drop in a week is not that usual. I would have preferred to buy today, but I didn't. And next week, I may even write that I would have preferred to stay in cash because there is no telling how much further down bond funds will go.

 

[NW-Bound]

We have different styles of short-term trading. With BND, you have to trade $100K in order to expect to make $1K short-term. I like to follow more volatile sectors which may move 3% in the same short period, then use 3x or 2x leveraged ETFs. This way, I hope to make $1K while plunking down only $10K.

On top of that, I often use covered calls, so that I get up to $500 up front with the call premium, then get the rest when the call gets exercised. If the sector turns around and the call expires worthless, the premium helps reduce my loss. Then, I wait for the right time to write more calls to get some gains or at least reduce my loss.

When I time it right, the trade feels really good, and I make 10% in less than 1 month. The leveraged ETFs are not meant for long-term holding, but occasionally I had to sit on them for a few months before I make money.

I reserve a couple of percent of my stash to plays like this, so the gains add up to a fraction of 1% of portfolio each year, but it is fun. I get to test my market call without risking my long-term holdings.

 

[LOL!]

I am not short-term trading BND. It is part of my long-term asset allocation.

Can't one do a little market timing when purchasing long-term holdings?

Also, I do not hold cash if I can help it. I simply change my asset allocation at certain times identified in this thread. When I change my asset allocation, I will exchange from a bond fund to an equity fund or vice versa.

With equities up and bonds down, I am starting to get a little overweighted to equities. I may have to do something about that. And I do not mind moving a 6-figure amount from one holding to another.

 

[utrecht]

Utrecht, any trades lately or has the VRBO thing gotten you off track? This is earnings week and this thread is unusually quiet.

Ive kind of been like a deer in headlights the last 6 wks. It doesnt make sense to me that the market keeps going straight up. It should correct somewhat but I keep being proven wrong so Ive been very quiet lately. Ive made very few trades.

I decided not to fight the trend and held my nose and sold some weekly SPY puts the last 2 wks that expired worthless leaving me with nice profits.

Im currently short some weekly SPY 207.50 puts that will most likely expire worthless tomorrow. Im short a good amount of AAPL Nov95 puts that I sold about 2 months ago that are almost a sure thing at this point.

I have a bearish SPY trade on. Its a Nov 1X2 205/201 put spread. Basically its a 205/201 put spread with an added short position of an equal number of 201 puts. If SPY drops to 201 at Nov expiration I will make a sweet profit. If it drops below 201, I will let them put the stock to me with a cost basis of 196.95 and I will write calls against the stock. If SPY keeps going up, everything expires worthless and I keep $0.05 per contract.

I made a big mistake 6 weeks or so ago by selling a rather large portion of my long term SPY holdings at 192.90. I looked like a genius for about a week when the market kept dropping, but now feel like a clown for adjusting my long term holdings to short term market movements. I was trying to protect myself from what looked like a prolonged drop in the market, but it was a dumb mistake to adjust my long term AA when I was comfortable where I was at.

 

[NW-Bound]

I am not short-term trading BND. It is part of my long-term asset allocation.

Can't one do a little market timing when purchasing long-term holdings?

... I do not mind moving a 6-figure amount from one holding to another.

OK, so you are doing a much milder form of market timing by making judgement call on when to rebalance. What I am doing is pure market timing, but I am chicken so do not dare trade a big portion of portfolio with 2x or 3x leveraged ETF.

Still, in the end analysis, what we are doing may not be that different. I still have $65K out on various leveraged ETFs on high-beta sectors, and that is equivalent to playing $200K with S&P 500.

 

[Fermion]

I carved out $100K to do the CapitalOne360 thing for both of us. Yeah it is only $1200 or so for 90 days hold but it is 100% guaranteed unlike most of my dealings. This leaves me with not a lot of trading money until I get rid of these 45 Corning Jan 2017 $13 call options. Corning just keeps going up for some reason (could be the 50% buyback?) so I guess not trading is actually making me money. Who would have thought we would be back to DOW 18,000 so fast?

 

[NW-Bound]

Yesterday, I bought a few $K of a 3x leveraged EM ETF. Markets around the world have been knocked quite a bit since the US job report came out and fortified the chance of the Fed raising rate in December. The movement was overdone, and I think it is turning around.

I do not want to do more than a bit of money just as a lark, because I still have a lot more tied up in trades that have not unwound due to their options not yet expiring. When these covered calls expire, depending on whether the shares get called or not I may have more money to gamble, er, invest in these short-term plays.

 

[LOL!]

Interesting that you bought a 3X leveraged EM ETF here. I am patiently waiting for the interest rate tick to work its way through the markets.

In the meantime, I am fully invested in my asset allocation except for a little bit of cash from dividends sloshing around that I have to move from one account to another, then invest. My portfolio managing this month will be to convert some to a Roth IRA and then recharacterize another Roth IRA.

I think patience will be rewarded here.

 

[NW-Bound]

It's for a very short-term move, playing on a bounce. When I make a few hundred bucks with this bet of a few $K, I am going to book it. It may happen in just a few days, if I call it correctly. These leveraged ETFs are not suitable for long-term holding anyway.

PS. Today, it has not moved much. I hope it will not resume the slide. Maybe mentioning it here will jinx it.

 

[BBQ-Nut]

Been reviewing individual holdings against my target asset allocation.


Must say that overseas holdings have been underwhelming. My 4yr holding of VWO has been dismal.


I may take Bogle's crystal ball prediction and reduce my overseas allocation so that I can say I'm 'in', but no longer be a continual downward drag.

 

[papadad111]

We are below water for the year again SP 500 below 200 day moving average.

Lots of retail anxiety in Q4 and the Black Friday deals are now being pulled up to earlier in the month of November : singles day.

So here is my forecast.

Near term we will keep bleeding 0.25 - 0.5 percent per day. Small down days will land us lower-- will end the year we will be down 3-5 percent for the year. 1950 or so ..


Long term. 2016 will be another down year and 2017 will start off down too and end up about where we are today - SP 2100. New market highs not til 2018. Interest rates will rise , but less than 75 basis points from where we are today.

Position yourself in equities that pay dividends and probably better to hold cash vs Bonds. Dollar will move up just a bit from here. Not a lot more.

The upside bet is for stabilization in oil and related energy shares. 55 will be the norm for a barrel of crude.

I don't like it. Looking into a long dated out of the money SP500 or similar broad market put strategy.

Hmmm.

 

[jfn111]

We are below water for the year again SP 500 below 200 day moving average.

Lots of retail anxiety in Q4 and the Black Friday deals are now being pulled up to earlier in the month of November : singles day.

So here is my forecast.

Near term we will keep bleeding 0.25 - 0.5 percent per day. Small down days will land us lower-- will end the year we will be down 3-5 percent for the year. 1950 or so ..


Long term. 2016 will be another down year and 2017 will start off down too and end up about where we are today - SP 2100. New market highs not til 2018. Interest rates will rise , but less than 75 basis points from where we are today.

Position yourself in equities that pay dividends and probably better to hold cash vs Bonds. Dollar will move up just a bit from here. Not a lot more.

The upside bet is for stabilization in oil and related energy shares. 55 will be the norm for a barrel of crude.

I don't like it. Looking into a long dated out of the money SP500 or similar broad market put strategy.

Hmmm.

With the amount of excess oil looking for storage space-
Something Very Strange Is Taking Place Off The Coast Of Galveston, TX | Zero Hedge
and Iranian oil coming online $55 per barrel might be optimistic.

 

[NW-Bound]

Yesterday, the EM market was holding up well initially while the S&P started dropping. Then, midday the whole world market succumbed, so my latest bet lost me money. Good thing the bet size was small.

There's a report out of OECD saying the world growth will continue to be subpar. Some of the smaller countries have not done well this year. Who would have thunk that lower oil prices would not help some of the smaller countries who import oil?

 

[RAE]

So here is my forecast.

Near term we will keep bleeding 0.25 - 0.5 percent per day. Small down days will land us lower-- will end the year we will be down 3-5 percent for the year. 1950 or so ..


Long term. 2016 will be another down year and 2017 will start off down too and end up about where we are today - SP 2100. New market highs not til 2018. Interest rates will rise , but less than 75 basis points from where we are today.

Position yourself in equities that pay dividends and probably better to hold cash vs Bonds. Dollar will move up just a bit from here. Not a lot more.

The upside bet is for stabilization in oil and related energy shares. 55 will be the norm for a barrel of crude.

I don't like it. Looking into a long dated out of the money SP500 or similar broad market put strategy.

Hmmm.

Yeah, I would not be surprised if most of your predictions come true, or pretty close anyway. I've been saying for a while now that this market is overdue to run out of gas. It's been artificially manipulated/propped up by the Fed for 6+ years now (with QE 1,2,3, zero interest rates, etc). All of that is coming to and end now, and as we (finally) get back to reality, earnings are just not there to support the significant gains we have seen. I have prepared myself (as best I can) for several years of sub-par market performance, as that is what I expect to see going forward from here. I do not think inflation will increase very much (if at all) from where it is right now, over the next few years.

 

[Mulligan]

Yeah, I would not be surprised if most of your predictions come true, or pretty close anyway. I've been saying for a while now that this market is overdue to run out of gas. It's been artificially manipulated/propped up by the Fed for 6+ years now (with QE 1,2,3, zero interest rates, etc). All of that is coming to and end now, and as we (finally) get back to reality, earnings are just not there to support the significant gains we have seen. I have prepared myself (as best I can) for several years of sub-par market performance, as that is what I expect to see going forward from here. I do not think inflation will increase very much (if at all) from where it is right now, over the next few years.

That has been pretty much what my cheap crystal ball has repeatedly said. So I have pretty much been all in mostly on investment grade preferred stocks and ETD. I just collect the 6-7% dividends and move on. They have been very good, safe and relatively immune to any of the market volatility. I don't see much in the future that will change it and hopefully there will not be.


Sent from my iPad using Tapatalk

 

[Fermion]

I bought Seadrill at $5.95 Friday morning and sold it at $6.42 the same day. Incredible swings in this market. Unfortunately I also bought Gilead at $103 Friday and it closed at $102. So about even on Friday, maybe a little ahead.

 

[NW-Bound]

Two weeks have gone by, and nobody traded anything?

I have not done any trade since the bitty purchase of a leveraged EM ETF. I lost a bit of money on paper, then made money also on paper. Then, yesterday, it dropped big and I am back to being slightly in the red.

But there was action going on my account nevertheless. A bunch of covered call options expired, some in the money, some worthless. I now have 25% cash in that account to play with.

Don't know what to do yet. Most likely, more of the same: buy some ETFs and write out-of-the-money covered calls on them as well as the ones I still hold.

 

[jfn111]

I bought some PFF for the wife's IRA. My individual stock picking has sucked this year so I'll take some dividends.

 

[LOL!]

Since my last trade on 10/29, my portfolio is up a mere 0.06%. I think patience is still the watchword here.

I've been mostly reviewing my tax situation this holiday. I have donated some shares to charity, given my college kid some shares to sell (no taxes) and put the money in a Roth IRA. I've also asked my spouse to change her 401(k) contribution to capture more employer-match, and to increase tax withholding since we've paid less than $1,000 in income taxes up to now which is way too little. I've worked out how much of my teaching income to contribute to my solo 401(k). Finally, I've done some tax "What if?"s to figure out if I need to recharacterize a Roth conversion and the answer will depend on whether or not my spouse gets a bonus in mid-December, so I will have to do it all again in a few weeks.

Trades? In all this excitement I kinda forgot what those are.

 

[LOL!]

Earlier this week, the BND that I bought at the end of October finally recovered back to the value I purchased it at. Then Yellen had some speeches and a congressional appearance, so today it has dropped more than 0.6% so far. As I think I have noted before, bond funds like this do not drop 0.5% in one day very often.

So I have submitted a small buy order using some recent monthly dividends with a limit price a little bit lower than current price. I will update later today the status of that order.

I am thinking also of exchanging some money from a short-term bond fund to a total bond fund (intermediate) at some point around the December FOMC announcement. I'll let folks know about that when I make a move.

 

[Fermion]

I have been darting in and out of shorting Netflix (which is funny since I am a Netflix subscriber). Rarely stay in a trade longer than an hour or two, but just messing around with the surge mid morning then the falloff around lunch eastern time. Long term the stock seems to be headed toward a market cap greater than Apple. Total gambling, but then so are oil stocks, healthcare, ...

 

[LOL!]

BND down 0.7% now, so my order was executed.

 

[NW-Bound]

Last week, I sold puts on a leveraged S&P ETF. If by April 2016, the S&P rises or does not drop more than 3%, I make 8% return on the cash I am holding to cover this bet. If the S&P drops more than 6% from here, I will have to buy the shares at a loss.

Only a small bet of a low 5-figure sum, so this money that I am looking to gain will be just enough for grocery for a couple of months. But depending on how the market plays out, I will use more of the cash I have in this manner.

 

[Fermion]

I have been doing the "Hillary" trade in biotech and last week was pretty good. Gilead was dragged over the coals for internal documents about how they were trying to maximize profits (the horror!) and it brought down all of biotech for a day or two. I purchased Amgen at $155 and Gilead at $101.50. Both came back strong on Friday, Amgen particularly well (up 4%).

Long term I think this will go about as far as the fiasco with Apple where Tim was brought before Congress and asked why Apple was legally trying to pay as little tax as possible. In other words, biotech is pretty safe IMO, at least from this.