LOL!'s Market Timing Newsletter

Just spent 24 hours out of contact with the world. What happened? 270 Looks like VEA is down at least 3.9% since I sold on Friday.
 
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Still actively writing out-of-the-money covered calls on my stocks. In fact, I am doing that this year more than ever, due to no transaction costs other than 35 cents per contract.

And with the market going crazy up/down like mad, I have shortened the holding period and played it by ear. While I used to write the contracts about 1 month out, then wait for them to expire, I now sell them at closer expiry dates if offered. And I also trade, meaning buy back before expiry, then sell again when the stock moves to permit a gainful trade.

It takes a bit of work to watch the stocks to catch the opportunity, but I am not traveling or doing much else, besides monitoring the virus scare news.

I made almost $22K YTD. Not a lot, as I "lost" several times that amount yesterday on my long positions when the market dropped almost 4%. But this $22K is the reward for this trading on top of my long-term positions, and I am OK with that. Not making a killing, but just this additional income is enough to live on already.
 
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OK, 2 days of dropping should be enough to try to catch a falling knife, so I sold all shares of a Total Bond fund in a rollover IRA and used the money to buy a Total US Stock Market index fund. 524 I guess I could call this an act of rebalancing.

My intention is to sell the stock fund very soon, as early as tomorrow for a profit.
 
Bouncing along for a 4-figure gain in that trade so far today.

And it has all faded away ....
 
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Clearly, I missed my chance to sell yesterday. I'm still underweight in equities and getting more underweight by the day.
 
Could not resist selling some Total US Bond and buying some Total US Stock Market Index a moment ago. Bond funds just don't usually go up this much in one day. Combine that with today's drop in Total US Stock plus I still have a few fingers left from catching a falling knife from my last transaction, so I can still type in my orders. 049
 
That was a wild finish. Guessing over the weekend we will see further spread of the virus and by the open on Monday I expect the global Plunge Protection Team to swing into action. Whether that pushes the market up or down is hard to say, but I would guess we will see an attempt at a rally on Monday morning. I still think the purported bottom fishing is too early here. So far the Dow is down 14% from the peak, or about the average for a correction. It has happened extremely quickly, but we really haven't dropped all that much yet considering the market was overheated and that this isn't a simple recession scare. I think we will see some kind of bounce next week, but ultimately I expect a full on bear of at least -20%. If (as I expect) test kits get rolled out next week and a lot of the "flu" cases showing up at hospitals turn out to be WuFlu, I would guess the drop will be at least that of the average bear (-36% or so from the peak). Too early to buy. I think we will get a good idea of what the retail investor is thinking this weekend when we see if there is a run on grocery and drug stores.
 
brewer12345 said:
That was a wild finish.
Click to expand...
I had to go look as I left the computer right after my previous post. I was worried that by "wild" you might mean things got really bad.

I was pleasantly surprised to see the thing I bought today had gained 1.8% since buying it. Not bad for the 10 minutes of owning it.

I agree that the outlook is not to the upside.
 
I think this is interesting: https://www.zerohedge.com/markets/story-about-market-crashes

In a nutshell, if you look at the history of the equity market, 5% downside moves primarily come after a large decline in the market. If you bought the day of a 5+% move, your 3 month returns were almost uniformly high except for the September 2008 first day of a greater than a 5% decline. Even then, if you hung on for a year you got back to break even with dividends. So I suppose we should be watching for the big dump washout to start buying. Might be the opportunity to lighten up on or completely sell my puts and start buying.
 
That's another way of saying "Capitulation", but the note reports all the 3-month returns after such a happening without showing a negative control: What are the 3-month returns of randomly chosen or specifically chosen dates that do not follow a -4.89% one-day drop in the market? Such returns could easily match the numbers shown in the article, so it could be all about noise.
 
LOL! said:
That's another way of saying "Capitulation", but the note reports all the 3-month returns after such a happening without showing a negative control: What are the 3-month returns of randomly chosen or specifically chosen dates that do not follow a -4.89% one-day drop in the market? Such returns could easily match the numbers shown in the article, so it could be all about noise.
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Statistics class was a looonnnnggg time ago, so help me out here: why do we care what random days 3 month returns are? I guarantee they are not high single digits on average. We want a buy signal right?
 
brewer12345 said:
... why do we care what random days 3 month returns are? I guarantee they are not high single digits on average. We want a buy signal right?
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If an article is quoting that 3 months after a drop the market is up 10%, but it is up 10% most of the 3-month's later time periods, then there is no buy signal. Instead, it is just noise.

But that written, I certainly believe in buying equities on those limited days that the stock market drops a lot. However, there is more to it than that since if the market drop 3%, then 4%, then 5%, another 3% drop is not as big deal as the first 3% drop or at least it is not a big deal until enough time passes to make people forget about the run of drops.
 
I think that all this speculation based on recent (20 years) market history is not applicable. This is a fundamental business challenge.

One community-acquired infection was identified in Oregon today, the patient is in Kaiser's Hillsboro hospital. They did an e-mail blast today (DH is a member) about what to do if you think you are sick complete with phone numbers.
 
LOL! said:
If an article is quoting that 3 months after a drop the market is up 10%, but it is up 10% most of the 3-month's later time periods, then there is no buy signal. Instead, it is just noise...
Click to expand...


The market does not go up 10% in a normal 3-month period. That would mean the average annual return would be 46% a year (10% compounded 4x).


Brat said:
I think that all this speculation based on recent (20 years) market history is not applicable. This is a fundamental business challenge...
Click to expand...


The guy who wrote the article pointed out that the 2008-2009 crash was quite different than earlier market behaviors. During that terrible time which many of us still remember well, the market bounced up/down more than 5%/day several times, but the overall trend was down and down until the market lost 55%.

Each time may be different. :)
 
I played with small NASDAQ penny stocks and did some day trading today. Most of these pharmacy stocks were up big from working on the corona virus vaccines. I figured it was only fair if I made a few dollars from them while my 401K took a $50,000 hit this week from virus fears.

By buying the dips, and selling on the spikes (several times), I made 115% today, and hope to make more $$ in premarket trading, and Business hours trading on Monday.
 
I am staying the course on my allocations in my 401K to take advantage of lower share prices on the equity funds I am in. I am still working, so 20% of my paycheck is alloted for these purchases.....not panic selling to ensure losses !
 
Made way more than what I expected already by that late Friday trade, so I sold a moment ago. That means things will probably go even higher now. :) 621

I have a limit order to sell some emerging markets ETF share. Update: My limit was reached in the last 10 minutes of the trading day and executed.

I bought BND with all the money raised today since that's where the money came from in the first place.
 
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Once again, I would have been better off not selling equities yesterday, but at least I didn't stay in cash and my bond ETFs that I bought have gone up.

Update mid-day: And things have changed so that yesterday's transactions are not looking so bad anymore. 808
 
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I've been out of the reach of the internet for awhile. What have y'all been up to while I've been gone? 400
 
Sold some total US bond index and bought some total US stock index ETF shares a moment ago. 835.

My resistance is weak. I was saved in the last 2 weeks by not having an internet connection, but today I am connected.

Update: I did the same thing about 40 minutes later: Sell total US Bond Index and buy more total US stock index ETF shares. Now into a 6-figure commitment. 851
 
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I bought some SIX Friday around $11. Today I was throwing some money at United and Disney. I don't day trade much anymore, but when you are down this much why not.
 
Bought several hundred shares of AYTU....the company that is producing the 10 minute test kits for the drive through testing centers that Trump mentioned last night. If it wouldn't have been for bears shorting the stock, and 2 market shut downs today, it would have gone parabolic...still up 47% at this time....hoping for another 100-200%.
 
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