Market calls

[62Dawg]

FD: When you say 99% invested, I assume bonds?

 

[FD1000]

FD: When you say 99% invested, I assume bonds?

Yes. my special bond OEFs (open ended funds).

 

[FD1000]

The SP500 was down just -5.5% but...
In the last 1-2 weeks my email folder has been filled with "the sky is falling."
It's pretty predictable; any time markets go down, all the "experts" scream fire.
When markets go up, they scream "bubble" and "overvalued."
This is why I tuned out the noise.
If you didn't sell, there was no need to buy.

PDI: The weekly MACD didn't signal a buy.
But my other shorter-term and longer-term T/A indicators signaled a buy today.

My in/out indicators for my portfolio have been in since April 2025, and I've been invested since that time at 99+%.

The SP500 is almost back to even.
PDI is inching back slowly, but the weekly MACD still hasn't signaled.

Let me show you an indicator that works much better with slower=bond funds but is still a nice one. It's called a 3-line break. You can read about it at (Three Line Break Charts | ChartSchool | StockCharts.com)
This one ignores time and why the chart isn't daily. It's a faster signal, and I use it for buy signals, and I look at others.
Let's look at PDI (SharpCharts | StockCharts.com). The size of the line matters too. Red line = sell/out. Green line=buy/in.

Lastly: I sell a lot quicker than I buy because market meltdowns are much faster and nastier. I don't mind being wrong and staying out a week, but when I'm right, I'm out for weeks and sometimes months, as I was from 01/2022 to 11/2022.
While I was out for months in 2022, I made several short-term trades for several days and made money using ORNAX. When risk is high, I only trade days when I see a real opportunity.

 

[FD1000]

Last week the SP500 made a new high for the year.
VIX+MOVE are low = stay invested.
International has done much better and I noted it several months ago by saying that finally being diversified in 2025 paid out since 2010.

So, does everything look good?
I see cracks. Markets lead mostly with more aggressive stocks. It looks like rotation has been happening in the last several weeks.
An easy way to see this is by comparing higher risk to lower risk on the same chart. The chart below show
VUG:VTV(LC Growth:LC Value) + VOT:VOE(MC Growth:MC Value) + VBK:VBR(SC Growth:SC Value).

As you can see:
SPY made a new high.
VUG:VTV+VOT:VOE+VBK:VBR all trends are in decline.

What does it mean? Yellow light that may turn into a red light. Watch out, be alert.

Bond OEFs: I don't see any of the above. The trends are beautifully going up.

PDI: a sell signal was given in early October based on weekly MACD. The weekly signal hasn't changed yet.
The daily signal had a buy but within a couple of weeks faded.

QLENX: a beautiful, lower volatility going up, but that's not all.
QLENX:SPY shows that QLENX has a better relative trend. During June-July SPY went down, but QLENX went sideways. It's a 2-knockout when performance is better and risk/SD is lower.
I wanted to buy QLENX or at least QMNNX months ago, but as a disciplined investor that made much more than I expected with bond OEFs, I'll pass.

 

[FD1000]

Today both stocks and bonds were down.
The myth that bonds will save your portfolio broke down again.
The VIX didn't explode and isn't high enough. MOVE is still low.
I'm invested at 99+%.

 

[Mr_Pink]

EGRIX up a penny on the day.

 

[FD1000]

EGRIX up a penny on the day.

EGRIX was flat today.

 

[FD1000]

I used to like SCHD, up until 2023. It then went through a rough three-year stretch from 1/1/2023 to 1/1/2026, returning about 22%, while SPY gained 85%+, nearly four times as much.


Times have changed.
Value (VTV) has been outperforming growth for several months now, and SCHD has been doing even better.
International equities have also been outperforming for months.

None of my indicators signaled a sell.

 

[Quattro73]

I think it was was last year (early 2025) when SCHD did its rebalance and it took on a fairly heavy (heavier anyway) energy tilt. That was not hurt in the past few months.

 

[kennethwes]

FD: When you say 99% invested, I assume bonds?









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[Cognito]

Hi FD

>>None of my indicators signaled a sell.<<
[/QUOTE]
Your opinion w/ this chart and the RSI indicator says sell. It looks like it is rhyming w/ Oct.

 

[Montecfo]

Today both stocks and bonds were down.
The myth that bonds will save your portfolio broke down again.
The VIX didn't explode and isn't high enough. MOVE is still low.
I'm invested at 99+%.

Hi FD,

I'm curious how you use VIX and MOVE. When VIX moves higher I am looking to BUY. How do you use VIX as a sell signal?

Thanks In advance.

 

[FD1000]

Hi FD,

I'm curious how you use VIX and MOVE. When VIX moves higher I am looking to BUY. How do you use VIX as a sell signal?

Thanks In advance.

First, I assess the overall market conditions. Is there something unusual happening—like the tech bubble in 2000, the COVID shock, the inflation surge in 2022, geopolitical tensions, or rate hikes? For instance, in 2025, there could be an announcement about raising tariffs, which could signal a shift.
Next, I monitor the markets to confirm these conditions.
I pay close attention when the VIX is under 20, then starts climbing quickly above 20—it’s a key signal to watch.
Also, is the MOVE index above 110? That’s another indicator I track.
There are a few more signals I follow, but I prefer to keep them private.
Once these conditions align, I’ll liquidate my positions—across the board.
This approach works best in slower-moving categories like bonds, where market swings aren’t as rapid.
Ultimately, I’ve reached a point where I’m comfortable selling, even if the timing isn't perfect. I typically sell 2-3 times a year. If I’m wrong, I’ve learned to buy back within a week. If I’m right, I might be out for weeks or months before re-entering.

Everyone wants an easy sure thing; it doesn't exist, and they refuse to sell/buy a huge %. That's the power of 2-3 funds.

 

[Montecfo]

I hear you. Yes bonds are much easier. But in my experience if you wait for the Vix to climb above 20 you will already have taken some pretty heavy losses.

For example the VIX spent much of the day under 20 before closing at 20.82. That spelled pretty heavy losses for the equity investor.

And the VIX has been above 20 many times this year and rather quickly back to 18.50 or so. Not sure how one would make hay of that.

Now, if one could predict VIX spikes up to 25+, and sell before they happen, and then rebuy at the peak, you would have something.

But it's a bit like saying just buy low and sell high. Good idea but not particularly actionable.

 

[FD1000]

That spelled pretty heavy losses for the equity investor.

Where are the heavy losses? YTD, the SP500 never lost more than 3% from the top.

Did the MOVE reach at least 100? No
The idea is to sell only in high risk. You can't eliminate losses! I want to limit the big losses.
This is why I use bond OEFs.

I gave a good example in 03/2020 during covid. You can see below that by the end of Feb 2020, IOFIX+NHMAX (which I owned) were still up, while SPY was already down over 10%. I had several days to sell.
If you sold SPY, you lost about 10%. Several weeks later it lost over 30%.

 

[Montecfo]

But the losses sustained of you wait to see until the VIX is above 20 will be large as the were the day I mentioned. If you sell at that point, you sustained them. And then what is your signal to re-enter?

For equities, you have not been clear on your true sell signal, or if it is VIX above 20, your signal appears to be ineffective from what I can see.

If you are saying your approach is only for bonds as your response suggests then that is a different matter.

 

[COcheesehead]

I personally use the VIX to buy, not to sell. It’s a pretty clear indicator of buying opportunities for equities.

 

[FD1000]

But the losses sustained of you wait to see until the VIX is above 20 will be large as the were the day I mentioned. If you sell at that point, you sustained them. And then what is your signal to re-enter?

For equities, you have not been clear on your true sell signal, or if it is VIX above 20, your signal appears to be ineffective from what I can see.

If you are saying your approach is only for bonds as your response suggests then that is a different matter.

I’m not going to try to convince you. It works for both.

 

[FD1000]

I personally use the VIX to buy, not to sell. It’s a pretty clear indicator of buying opportunities for equities.

VIX is only one of my indicators. By itself it isn't great for trading.

Below is a good example from early 2020, during covid. If you bought at 30, you lost 30+%. If you bought at 40, the SP500 lost another 25%.
I sold in late Feb and started buying in the last week of March.

In 2025 I sold in March. The VIX didn't show anything. I have never used the VIX by itself to trade.

 

[COcheesehead]

It's clear when it's high, mainly over 30-35. By then stocks had lost quite a bit.

Right, but if you have cash or appreciated bonds…Clear buy signal. Rarely does it go over 40, thin air above 50. Only twice in the last 25 years has it gone above 60. Those are sell the farm and buy signals.

 

[FD1000]

Anyone who trades based on VIX by itself, I wish them good luck. Not my cup of tea.
This is why I based my trades on unique market situations, and I only trade when ALL/Most of my indicators prove it. The idea is to stay invested at 99+% in my special bond fund, under 1% in cash for expenses, and sell 2-3 times per year based on markets, never predictions.

 

[COcheesehead]

Trade - sell - off the VIX? Agree. Buy off it, all day long.

 

[Montecfo]

I personally use the VIX to buy, not to sell. It’s a pretty clear indicator of buying opportunities for equities.

Same.

 

[Montecfo]

I’m not going to try to convince you. It works for both.

Well, I stand ready to hear your explanation..It just seems really unclear to me.

 

[FD1000]

Well, I stand ready to hear your explanation..It just seems really unclear to me.

To explain it properly, I’d have to walk you through my full model, which is proprietary and built in part on years of experience. If you’re interested, you can read more in my profile.
I’ve spent years explaining this approach, and most people simply weren’t paying attention.
Here’s a common strategy used by several, not me: Someone holds a 60/40 portfolio. After stocks drop 20%, they rebalance—using the 40% in bonds and cash to buy more equities. At the bottom, that portfolio may be down 12–15%.
But that also means the portfolio still absorbs a large share of market losses. If stocks fall 50%, the portfolio could easily decline 25%. That’s not acceptable to me in retirement.
Another approach is to allocate to alternative funds (ALT funds) that aim to outperform or hedge risk. The problem is that, over time, most of these strategies haven’t delivered consistently strong results.
At this stage of life, I’m not trying to maximize returns. I already have enough. My priority is limiting downside risk. In my view, the most reliable way to do that is to sell and protect capital.
As the article explains, avoiding the worst market days can make a significant difference in long-term outcomes.
(www.cambriainvestments.com/wp-content/uploads/2018/01/Where-the-Black-Swans-Hide-the-10-Best-Days-Myth.pdf)