Ocean's ETF Blog

[ocean]

Hi,

Merry Christmas everyone. After a year off from this forum, I am coming back, sort of. Glad to see Tom is running the Autotracker smoothly and a lot of members are doing real good this year.

As for my TSP, I am hanging in there with some gains this year with no complain. I have been more conservative than the last few years because of my retirement is near.

A year or so ago I started simulating the futures and commodities short-term trading using Tradestation, the results at the end was not satisfied and I pretty much gave up on it. Instead I have been studying the longer term investment using Simple Moving Averages with information I found online. With 6 months of testing, I am pretty happy with what I found and I have been tweaking here and there on the simulation and the results are to my satisfactory.

About a month ago, I was bold enough to start my own blog to document my call. Tom is kind enough to give me permission to link my blog under my signature here and post the link in his home page. Thank you Tom. The blog basically concentrates in ETFs and TSP equivalent ETFs. I will use this thread to talk about some of the my ETF activities also. Wish you all a happy holiday season.

Thanks
Ocean

[Show-me]

Look at what the cat drug in! Merry Christmas Ocean! I will be visiting.;):D

[ocean]

Hi Show-me,

Hope everything is well.

BTW: the blog is: http://oceanportfolio.blogspot.com

Thanks
Ocean

[tsptalk]

Good to see you again ocean! Best of luck with your blog!

[nnuut]

Great to hear from you again Ocean, your Tracker is purring like a kitten. Best of luck with your Blog.:D
Norman

[ocean]

Thanks Tom and Norman.

Basically my strategy is based on the weekly Simple Moving Averages (SMA) with cross-over action. The cross-over moving average signals are SMA-4 and SMA-39. When SMA-4 crosses above SMA-39, it's a up trend and it is a buy. When SMA-4 crosses below SMA-39, it is a down trend and therefore it is a sell. I also use SMA-18 and other indicators such as MACD, RSI, ADX, Bollinger Band for additional confirmation. This simple or similar technique has been documented with success in various online sites.

In OceanPortfolio, there are 5 ETFs which I like. If the trend continues to hold while the SMA-4 is higher than SMA-39 on the weekly chart, these ETFs should yield some good returns.

The 5 ETFs are:

1. EFA : $55.57 (as 12/24 closed)
2. EWY: $47.30
3. EWZ: $73.79
4. FXI: $42.35
5. ILF: $47.41

Note: EFA is equivalent to the the TSP I fund

[ocean]

Wish you all a Happy, Prosperous, Successful and Healthy New Year.

Starting off a new year 2010 this morning and having a fresh cup of coffee after a late night New Year Eve party, I am sitting in front of my computer and wondering how many of those top endoments invested in ETFs. It comes to my mine that there are two sites 1) Alphaclone.com and 2) StockPickr.com that I know published these information which these sources are publicly available.

After some searches, here are my finding: The trend of the top Ivy League schools are heavily invested in ETFs and carrying the similar position into 2010. According to their track records, these school all had their fantastic performances in the past except 2008. In 2009, schools with top endowments such as Yale University, Harvard University, MIT, University of Texas and Standford University which they had more than 20, 30, 40, 50 and even 60% returns on their portfolios. Harvard University took the lead and resulted with 65% returns in 2009.

You may wonder what investments they had invested in 2009 and the answer is ETF. Not only they invested in ETFs but they focused in the selective markets such as Emerging Market, International Market, Country specific and Major Market Index fund.

Here are some of the most popular ETFs that are still being held by the top endowment management.

1. EFA
2. VWO
3. EEM
4. EWZ
5. FXI
6. EWY
7. SPY
8. OEF

To my surprise, my simulated Ocean Portfolio contains 4 out 5 of these ETFs that I am tracking. Let's see how these ETFs will play out in 2010.

[ocean]

Although my Ocean Portfolio is based on the technical analysis, occasionally I do look at how the fundamentalists think about the stock markets. Apparently there are still opportunities in the Emerging Markets. Here is an article published (Jan 10, 2010) in SeekingAlpha.com by Hao Jin who is a Chartered Financial Analyst (CFA) and Certified Management Account (CMA).

"Forbes’s Fundamental Opportunity Index is based on the idea of value investing: buying underpriced, fundamentally sound stocks. Many people believe that emerging markets, which were up more than 70% in 2009, are likely to pull back, or at least take a breather in 2010. Nonetheless, there are still opportunities in those markets.

The most popular ETF to provide emerging markets diversification is iShares MSCI Emerging Markets Index Fund (EEM), which provides investment results that correspond to publicly traded securities in emerging markets.

However, investors (especially people near retirement) face two main financial concerns – longevity risk and inflation. In order to boost your overall returns, emerging markets should remain 10%-20% of your long term portfolio."

For a full story of the article, here is the link:
http://seekingalpha.com/article/181795-fundamental-opportunities-in-emerging-markets

[ocean]

DOW had one day dropped of 100.90 points and S&P500 gave up 12.43 points on Jan 15. Given the DOW had reached the highest level since Oct 2008, its momentum is still trending upward and it is not a big factor at the point we should worry yet as it showed on the weekly moving average charts.

As for my simulated Traders Pick portfolio, the daily chart for FCX showed sign of weakness but it did not reach the selling point yet (as showed in the chart). Once the MA-4 touches the MA-18, I will sell it and look for another opportunity to get back in.

I found some of the ETFs can be traded using daily charts with MA-4, MA-18 and MA-39 moving averages and crossover signals. These ETFs tend to stay in one direction longer. Using these moving averages and crossover signals really work well for these selected ETFs, but there are some ETFs, actually more ETFs don't work well by using these daily signals.

ETFs that I found which work well from the TradeStation platform back-testing are:

1. EWY
2. EWZ
3. FCX
4. ILF

Signals will not work for ETFs are:
1. SPY
2. QQQQ
3. GLD
4. XLK

[ocean]

What is Moving Average Crossover Index (MACI) ? You may say that you'd never heard of it. You are correct that the MACI term does not exist even I tried to google it. I guess I just made it up and created a new acronym.

My definition of MACI is the as follow:

MACI = (FastMA - SlowMA) / SlowMA * 100

Example:

Let's use FCX with the daily chart and identify the numbers of the simple moving averages at the closed of Jan 15, 2009 using MA-4 (4 days) and MA-39 (39 days).

The numbers are: MA-4 = 85.08, and MA-39 = 83.34.

Then use these numbers and plug in the follow MACI equation I created it (I am sure other people have been using this method and nothing is new)

MACI = (MA4 - MA39) / MA39 * 100

maci = (85.08 - 82.15) / 82.15 * 100
maci = 3.56

During the trending market, the higher the number of MACI, the trendier the underline equity will be (in theory and nothing is guaranteed). If I can only select one equity over the other, I would pick the one with higher MACI and continue to monitor its trend.

There are two ETFs currently with its MACI is much higher than FCX. These are TUR and ECH and its MACI are 10.81 and 9.53 respectively. On my simulated Traders Pick portfolio, I will replace FCX with either one of these two ETFs tomorrow (Jan 19, 2010) at the closed the market and see how it will play out.

[ocean]

This week had been tough for the major markets. S&P 500 dropped more than 44 points from 1136.03 to 1091.76 with a 3.9% loss this week. The emerging markets dropped even more. Some of the ETFs in the Ocean Portfolio had been stopped out with a 8% stop.

Normally the Ocean Portfolio will take the signal at the end of the week with the weekly chart but I took the stops with the daily signal seeing that the downward momentum on these ETFs were stronger such as EWZ. EFA is also near the trailing stop price and will see how it plays out. Current holdings are: EFA, EWY and TUR.

[JTH]

Thanks Ocean, it's great to have you posting more often :)

[ocean]

Thanks JTH.

Both Emerging Markets and International ETFs got hit pretty hard and hit its 8% stop loss from its entry from my Ocean Portfolio. The EFA weekly moving average MA-4 crossed below MA-18 and is approaching MA-39. EWY MA-4 is approaching its MA-18. As of Jan 29, both ETFs were stopped out based on the 8% trailing stop.

Currently only TUR with 20% of the Ocean Portfolio is still on hold and the remaining 80% is in cash. I will continue to observe these moving average charts to determine what my next move will be.

The TSP portfolio suffered the same way that EFA is stopped out and I replaced it with 100% AGG.

Traders Pick still holds 100% TUR as of now.

[ocean]

It's been a pretty tough 2 weeks for the Ocean, TSP and Traders Pick Portfolios. All selected ETFs finally hit the protective stop loss targets and were sold out. The Ocean Portfolio is in 100% cash now but after a total loss of 9.14% when I began tracking on 12/11/2009. The other two portfolios were not doing that well either. But with stop loss already established, the damage could be control in a reasonable manner.

The TSP portfolio lost 5.39% and it is now 100% in AGG (F fund).

Well, I will wait for the next entry point to get back in. It really doesn't matter either it's a Long or Short as long as the trend is established noticeably with the moving averages. Have a nice and safe weekend. (It is snowing heavily outside now - New Jersey and nearby states),

[ocean]

The major indexes had some gains this week as the DOW rose 0.9%, the NASDAQ rose 2% and the S&P 500 made 0.9%. The gains were not much but at least it stopped the prices from falling as it was in the last few weeks.

I looked at the weekly charts and found that there are few ETFs which may be a potential buy as a long position in the Ocean Portfolio. These are EWZ, ILF and EFA.

EWZ and ILF are closed above the weekly moving average MA-39 with the MA-4 is above MA-39 and the EFA is also approaching it. To determine the right time to re-enter as the long position, I basically use MACD, RSI and other filters to confirm my entry point. As for now, these three ETFs will be on the close watch list.

Link for EWZ weekly chart from StockCharts.com

http://stockcharts.com/h-sc/ui?s=EWZ&p=W&b=5&g=0&id=p38757782269

Ocean

[ocean]

The weekly moving average cross-over had triggered a buy (long) signal on the Ocean Portfolio. Here are the new positions for 4 ETFs at the market closed today:

1. EWZ
2. ILF
3. FCX
4. KOL

I am watching the EFA chart for its entry on the TSP retirement system. When it triggers, I will replace the AGG with EFA.

The inverse SH on the Trader's Pick portfolio was sold with a loss as I anticipated the market may move higher from this point. The desired ETFs that I am watching have not been triggered yet. The watch list included:

1. EFA
2. EWZ
3. ILF
4. FXI
5. TUR
6. EWY
7. ECH
8. EEM

Link for ILF Weekly chart from StockCharts.com

http://stockcharts.com/h-sc/ui?s=ILF&p=W&b=5&g=0&id=p38757782269

Ocean

[ocean]

Mark Mobius is known as a legend in the emerging markets investment and he has spent over 30 years in Asia continued seeking every opportunity in investing in this area. I recently found that he has an active blog and it is worth to mention for those of you are interested. The link is http://mobius.blog.franklintempleton.com/

One of his blog stated that he believed it needed to be optimistic in investing in the emerging markets and the personal qualities are the building for good investing.

"In emerging markets investment, I believe it is necessary to be optimistic. While one can certainly learn numerous technical skills that help in making investments or managing a portfolio, a large percentage of investing is still psychological. Both buyers and sellers act on a combination of instinct, information and logic. The development of certain personal characteristics could play a key role in contributing to your investment success."

Click here for the full story: http://mobius.blog.franklintempleton.com/2010/02/18/personal-qualities-that-are-building-blocks-for-good-investing/#more-555

[ocean]

The moving average signals showed upward trends on both the daily and weekly charts. Sold all AGG and replaced with EFA and IWM with 50% each on March 5.

[ocean]

The general markets regained its momentum and is moving upward. The SPY (S&P 500) weekly moving average 4-WMA reversed up and crossed above 18-WMA and it is well above 39-WMA.

http://stockcharts.com/h-sc/ui?s=SPY&p=W&b=5&g=0&id=p36431218549

Both RSI and MACD showed the similar effects that both indicators are tilting up. Some guru market analysts' worried that the markets may be heading down with big correction from the recent run up since March last year. May be they are right, I really don't know. As the trend follower using mainly the moving averages and confirmation filters, I will let the charts tell me otherwise. Currently, all my simulated portfolios are 100% fully invested. I will see how it plays out.

[ocean]

The trend is still up and the month of April is historically good for stocks. All 3 simulated portfolios are still long.

[ocean]

Sold the current position and took some small profits anticipating some small pull backs. Will go long again soon.

[ocean]

After a slight pulled back, the markets regained its strength and continued to move upward. All 3 simulated portfolios are now fully invested.

[ocean]

Despite the recent drop of the markets, I continue to hold the current position of all three simulated portfolios.

[ocean]

The market trends began to switch downward. I will liquidate all long positions in 3 simulated portfolios today and look for the short entry in the Ocean and Trader's portfolios. As in TSP portfolio, I will initiate a AGG buy.