Thread: coolhand's Account Talk

Right, Coolhand don't leave we like your ugly ass!:toung:

I found that the Seven Sentinels were late to the party all the time. Even though I consider myself an intermediate term trader, the big moves would happen and I was late. Man, I got slaughtered last summer during the whipsaw. Probably should have switched to the short term system during that time frame. Clawed my way back to -1% at the EOY by just staying in from 9-14 on. Don is awesome at seeing the huge market moves in advance, I gotta give him that.

Originally Posted by JamesE

I found that the Seven Sentinels were late to the party all the time. Even though I consider myself an intermediate term trader, the big moves would happen and I was late. Man, I got slaughtered last summer during the whipsaw. Probably should have switched to the short term system during that time frame. Clawed my way back to -1% at the EOY by just staying in from 9-14 on. Don is awesome at seeing the huge market moves in advance, I gotta give him that.

This market's character has changed much over the course of the last few years. All too often when the market decided to change direction, it did so very quickly and would whipsaw intermediate term traders/investors out of position. This is no accident. The market knows more than all of us combined. Intermediate term traders need to have a short term way to gauge increasing downside and upside risk when playing the intermedate term. That's what I try to do. It's not just about trying to beat the market, but just as importantly or perhaps more importantly it's also about risk management. Following a given system from signal to signal may not be the best approach, but that system is still a valuable tool in one's arsenal. Market savvy and other indicators also need to be deployed. Not everyone will agree with my position here, and that's okay. To each their own.

Originally Posted by coolhand

This market's character has changed much over the course of the last few years. All too often when the market decided to change direction, it did so very quickly and would whipsaw intermediate term traders/investors out of position. This is no accident. The market knows more than all of us combined. Intermediate term traders need to have a short term way to gauge increasing downside and upside risk when playing the intermedate term. That's what I try to do. It's not just about trying to beat the market, but just as importantly or perhaps more importantly it's also about risk management. Following a given system from signal to signal may not be the best approach, but that system is still a valuable tool in one's arsenal. Market savvy and other indicators also need to be deployed. Not everyone will agree with my position here, and that's okay. To each their own.

Coolhand you come up with some of the best comments. Thanks and glad your sticking around.hand

I agree with your commentary about whipsaws with timing systems, as I've been the victim several times myself in the last few months. This may be a good time to implement a buffer to minimize these effects. The markets are constantly changing, and what worked a year or two ago may not work as well as today.

Keep up the good work, Jim.

Originally Posted by MrJohnRoss

I agree with your commentary about whipsaws with timing systems, as I've been the victim several times myself in the last few months. This may be a good time to implement a buffer to minimize these effects. The markets are constantly changing, and what worked a year or two ago may not work as well as today.

Keep up the good work, Jim.

Thanks John.

Yes, system effectiveness can vary as market character changes. That's why past returns are not guarantees of future success. Most pros will tell us that and it's very true. It's also the reason why I like to buy solid, dividend paying companies as well as hold various bond instruments outside TSP. My high yield corporate bonds have been kicking butt for a long time and I suspect that will continue for another couple of years yet. I find that deploying more than one investment/trading strategy helps me sleep better too. Especially as one's portfolio gets larger.

Here's a mid-week chart of the Wilshire.

1-23-2013 18-21-36 PM.png

Two stocks I purchased about 2 weeks ago (Microsoft and Southern Company) have been rising ever since I posted their charts on 1/9/13. That's too short of a time to get overly excited about it, but I still think the entry price was right and that they will continue to do well over time. I have two more charts this evening for companies I'm currently watching (Birch, are you listening? ).

1-24-2013 17-53-33 PM.png

The first chart is Newmont Mining Corp. I'm seeing a possible triple bottom reversal pattern setting up, but the stock has yet to confirm this pattern with a breakout in the $48 area (the accum/dist line has a positive divergence over the past 2 months). For a longer term buy and hold strategy, the stock has potential. And it pays a quarterly 3.1% dividend, which makes it more attractive to investors.

1-24-2013 17-59-53 PM.png

I find Barrick Gold Corp. intriguing, mainly because I'm thinking that over the long haul, gold may begin another ramp higher, which I would think may put upward pressure on this company's stock. Looking at the chart, price is sitting right at the lower support line and the accum/dist line is showing a negative divergence, which suggests it's heading lower. But like Newmont Mining, it may be a stock worth watching for the longer term buy and hold investor. Let's look at a shorter term view of this stock.

1-24-2013 18-06-01 PM.png

We can see that support has been holding around the $33 area since mid-November. And again, that A/D line suggests it will probably fail to the downside in the short term. If that happens, this stock will begin to look attractive at some lower price. I'll be watching that A/D line for a clue in the weeks ahead. And this stock pays a quarterly dividend of about 2.7%.

So when the bull market finally ends, will gold and mining stocks find favor?

I don't have time post specifics this morning, but I'm seeing capitulation in sentiment and smart money moving to the short side. I'm thinking we have more weakness dead ahead, but the trend is still up, so this may be a buying opportunity in the longer term. Of course the big question is "how much weakness"? Given liquidity is still at extreme levels, that will serve as an offset to selling pressure as it has the whole month of January. It has not backed down yet. If that liquidity falls off significantly, the downside may be deeper (and faster) than many expect. That's what makes it challenging to gauge potential downside action. It's also a counter trend trade and carries increased risk for those who would try and short this situation. For now, I'm looking for some measure of continued weakness in the days ahead.

It's extremely normal for markets to test the 50-day exponential moving averages - but let's hope from much higher levels to make the pain more tolerable. The kind of buying we get off the 50-day tests will be prescient for the bull.

Originally Posted by Birchtree

It's extremely normal for markets to test the 50-day exponential moving averages - but let's hope from much higher levels to make the pain more tolerable. The kind of buying we get off the 50-day tests will be prescient for the bull.

I do agree with you. I also highly doubt we are near a longer term top. Given the action so far this morning, it's obvious any weakness will be from higher still.