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Coolhand's Market Analysis

The Never Ending Story

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We just can't seem to escape European headline risk. Between Greece's unexpected referendum on its bailout plan and Italy's financial downward spiral, risk has returned almost as fast as it seemingly disappeared. Not that it every really left, truth be told. But the market would have us believe it did.

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The Volatility Index shot up 20% today, which was in addition to the 10% surge yesterday, so fear is rising.

And Treasuries soared as well, leading the yield on the 10-year Note to drop back under 2%.

Market data wasn't inspiring either. October's ISM Manufacturing Index fell to 50.8. Economists had expected it to rise a bit to 52.1.

There was a modest rise of 0.2% in construction spending in September, but that was a tad below estimates of a 0.3% increase.

Here's today's charts:

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NAMO and NYMO appear to be heading to lower levels after today. Not all support has given way to this point, but some of it did. Both are back in negative territory and they also remain on sells.

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NAHL and NYHL dipped lower and also remain on sells.

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TRIN and TRINQ didn't move much after today's action. They were suggesting moderately oversold conditions yesterday and they remain in the same condition today. Normally, I'd have expected some measure of a bounce after yesterday, even if it didn't hold. But we gapped lower at the open in a big way instead and saw significant downside follow-through, which is somewhat troubling in the short term.

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BPCOMPQ adds to the overall negative tone as it dropped lower and triggered a sell signal after today's action.

So all signals are in a sell status. That puts the Seven Sentinels in an unconfirmed sell condition, but until NYMO drops to about a -53 on the chart, the system officially remains on a buy. But I think this market warrants a lot of caution at the moment.

I am still 100% G fund after today, but if the S&P 500 falls below 1200 points, I may begin building a modest position in stocks. I am not following buy or sell signals here, I am simply looking to build a longer term position in stocks over the coming months to a year. As I've said many times before, the volatility is more than I can trade around with our limitations so I am taking a longer term approach. I am not convinced we'll be seeing higher prices into the holidays, but it's certainly possible should the current selling pressure drop bullish sentiment levels. Even better would be a corresponding rise in shorting activity. The main problem I see is systemic risk to the global economy going from bad to worse. And I don't think that's a question of "if", but "when".

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  1. Unregistered's Avatar
    Go ahead and borrow the max $50k from your TSP, open a brokerage account (example. TDAmeritrade) watch the S&P moving averages, (or Seven Sentinals)and when you think a good bottom is put in such as the 1099 close in early October, buy the 3X Russell 2000 bull ETF, TNA with your $50k or more $$$ if you have it (25% or you total porfolio would be better). Now you're in the small caps and if you guess wrong and the market takes another leg down, you still have most of your 401k to but to work at a lower entry point.

    You treat you TNA as an extention of you 401k S Fund. Less stress because you're not risking your whole 401k.

    Now, let's do the match. It's 4pm, October 4th, TNA is @ $28 a share. You can't buy into the S Fund until the following day because you didn't do an interfund transfer before Noon of October 4th. The S&P closes at 1099. You feel tomorrow will be the bottom but maybe it goes all the way to 1020? Well, Say you take $50K and buy TNA shares, 1785 of them at $28. If tomorrow or 2 days later the S&P does fall to 1020, now you make a move with your 401k, 50% if you're still scared, 100% if not into the S fund.

    Well, the market did bottom, but not at 1020, the S Fund recovered most of it's October 4th loss of @ 5% the next day. By the end of October, TNA hit almost $53 a share, or $94,600, a $44,600 profit, almost the same as if you had been able to time perfectly with your 401k with say $350k with approx. 15% move. About the same amount of money but with a lot less risk. Think about.

    Has anyone been able to time the market with their 401k? Are you Nostradamus? Can you sleep at night knowing you just moved you whole 401k into the shock, I mean "stock" market?

    I just implemented this plan as of today. A few of us at work were going to move 50% of our 401k into the S Fund had the S&P tested the 50dma this morning, but that didn't occur. I instead moved $50k into TNA and closed up $5k today. I think we'll see some follow through tomorrow. If not, I still have my powder dry if the S&P does fall on some EU news. Either way, I'm no longer sitting on the sidelines watching the S Fund go up.

    By the way, TZA, 3X bear works too when the market looks toppy. Good luck.
  2. coolhand's Avatar
    Quote Originally Posted by Unregistered
    Go ahead and borrow the max $50k from your TSP, open a brokerage account (example. TDAmeritrade) watch the S&P moving averages, (or Seven Sentinals)and when you think a good bottom is put in such as the 1099 close in early October, buy the 3X Russell 2000 bull ETF, TNA with your $50k or more $$$ if you have it (25% or you total porfolio would be better). Now you're in the small caps and if you guess wrong and the market takes another leg down, you still have most of your 401k to but to work at a lower entry point.

    You treat you TNA as an extention of you 401k S Fund. Less stress because you're not risking your whole 401k.

    Now, let's do the match. It's 4pm, October 4th, TNA is @ $28 a share. You can't buy into the S Fund until the following day because you didn't do an interfund transfer before Noon of October 4th. The S&P closes at 1099. You feel tomorrow will be the bottom but maybe it goes all the way to 1020? Well, Say you take $50K and buy TNA shares, 1785 of them at $28. If tomorrow or 2 days later the S&P does fall to 1020, now you make a move with your 401k, 50% if you're still scared, 100% if not into the S fund.

    Well, the market did bottom, but not at 1020, the S Fund recovered most of it's October 4th loss of @ 5% the next day. By the end of October, TNA hit almost $53 a share, or $94,600, a $44,600 profit, almost the same as if you had been able to time perfectly with your 401k with say $350k with approx. 15% move. About the same amount of money but with a lot less risk. Think about.

    Has anyone been able to time the market with their 401k? Are you Nostradamus? Can you sleep at night knowing you just moved you whole 401k into the shock, I mean "stock" market?

    I just implemented this plan as of today. A few of us at work were going to move 50% of our 401k into the S Fund had the S&P tested the 50dma this morning, but that didn't occur. I instead moved $50k into TNA and closed up $5k today. I think we'll see some follow through tomorrow. If not, I still have my powder dry if the S&P does fall on some EU news. Either way, I'm no longer sitting on the sidelines watching the S Fund go up.

    By the way, TZA, 3X bear works too when the market looks toppy. Good luck.
    I appreciate the time you took to post this. And I'm very familiar (too familiar actually) with those triple leveraged funds. I don't touch them anymore (kinda like tequila ). But I understand what you're saying. I have a brokerage account with Scottrade, but my investing there is tailored towards dividend paying stocks and funds and I tend to hold them for long periods. I do very little actual trading anymore, although I'm am gearing up to shift to a more conservative posture in that account this month.

    I also keep a cash account in two ROTHs with a different brokerage and when the market dives, I'm often expending those funds to buy at lower prices. Then I build my cash levels again. Wash, rinse, repeat. It's not trading, but a modified buy and hold strategy you could say.

    TSP is so much more limited as you know.

    BTW, I sleep very well at night. I understand the market too well to get caught up in a lot of emotion. Once one understands that there's always another opportunity around the corner, the stress levels drop. But it wasn't always that way. I think most of us go through an emotional roller coaster when first learning how to actively manage a portfolio before we begin to settle down. That's if one makes it that long. Frustration does in a lot of folks.

    Let me also point out something that only a handful of TSP board members know about my blog. I have professional input from several sources on a daily basis. They provide me with short, medium and long term perspectives. I use those as well to help me shape my interpretation of the Seven Sentinels. What holds me back are our trading limitations more than anything else. My approach with TSP would be much different if we had daily IFTs again.
  3. Unregistered's Avatar
    Good plan you have. I wasn't refering to anyone in perticular when I said "are you Nostradamus or can you sleep at night". I have, like most I assume, a hard time trying to guess the markets next move. It's become a huge casino filled with lies, misinformation and agendas.

    Last year after years or trading stocks, mounting losses, and trying to hit a grand slam with less money, decided to take a loan from my TSP of $50k. I invested in a few casino stocks (no pun) and made back all of my previous losses until the past month. Last year was a good year but so far this year I'm even after so much effort and wasted time.

    This was when the idea of just using my TDAmeritrade account as an extention of my TSP 401k. In August, I moved all my 401k into the S Fund right after a big 500 point drop that day (got in at noon) so I was feeling very comfortable with my decision at S&P 1200. Right after making a quick gain of 2.8%, within 2 days, I was down over 6.5%. Unbelievable! Well when I got within 1% of a loss, I moved back into the G Fund and have been there ever since. Very Frustrating and makes you skitz or gun shy about doing anything.

    So now I decided to use my TDAmeritrade account as an extention of my 401k instead and buy TNA. Last night I went to bed and the S&P futures were 1218. I knew my TNA was down but the worry was over because now plan A, 50% TSP move into the S fund was looking in the cards if we were to continue down to the 50dma. Of course this morning all was Green so now it's wait and see if we retest 1285 or perhaps 1300 or the 52 week high. Who knows, maybe I'll still get the chance to make that TSP move if we sell off once again.

    I'd like to meet the SOB's whom decided to put our retirement money in the hands of those criminials on Wall Street and then tie one hand behind our backs and limit our moves. Maybe if we had until 4:30pm to make a interfund transfer and 3 moves max a month then we'd have a better chance of sucess.

    Thank you for your time you spend here trying to help us make a decision. I hope my ideas here can help some of our fellow TSP'ers too.
  4. coolhand's Avatar
    Quote Originally Posted by Unregistered
    Good plan you have. I wasn't refering to anyone in perticular when I said "are you Nostradamus or can you sleep at night". I have, like most I assume, a hard time trying to guess the markets next move. It's become a huge casino filled with lies, misinformation and agendas.

    Last year after years or trading stocks, mounting losses, and trying to hit a grand slam with less money, decided to take a loan from my TSP of $50k. I invested in a few casino stocks (no pun) and made back all of my previous losses until the past month. Last year was a good year but so far this year I'm even after so much effort and wasted time.

    This was when the idea of just using my TDAmeritrade account as an extention of my TSP 401k. In August, I moved all my 401k into the S Fund right after a big 500 point drop that day (got in at noon) so I was feeling very comfortable with my decision at S&P 1200. Right after making a quick gain of 2.8%, within 2 days, I was down over 6.5%. Unbelievable! Well when I got within 1% of a loss, I moved back into the G Fund and have been there ever since. Very Frustrating and makes you skitz or gun shy about doing anything.

    So now I decided to use my TDAmeritrade account as an extention of my 401k instead and buy TNA. Last night I went to bed and the S&P futures were 1218. I knew my TNA was down but the worry was over because now plan A, 50% TSP move into the S fund was looking in the cards if we were to continue down to the 50dma. Of course this morning all was Green so now it's wait and see if we retest 1285 or perhaps 1300 or the 52 week high. Who knows, maybe I'll still get the chance to make that TSP move if we sell off once again.

    I'd like to meet the SOB's whom decided to put our retirement money in the hands of those criminials on Wall Street and then tie one hand behind our backs and limit our moves. Maybe if we had until 4:30pm to make a interfund transfer and 3 moves max a month then we'd have a better chance of sucess.

    Thank you for your time you spend here trying to help us make a decision. I hope my ideas here can help some of our fellow TSP'ers too.
    I share your frustration, as do many of my co-workers. The high volatility doesn't help most TSPers, but more disturbing to many of us is the very real sense that the playing field is heavily tilted against us. That's also why so much money continues to sit on the sidelines as the bigger casino players shoot back and forth at each other with us caught in the crossfire.

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EFA (I Fund) (delayed)

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