Conservative. Smart. Investing.
Mark Bates As was mentioned last month in this space, December is usually a good month and for the SPY it was as the index rose 2.82% for the month. For the retirement ETF fund where trades are made based on where the stock closes at month end relative to its long term moving average, however, it was a lousy month.
November was a month where the S&P dropped less than 1% but there were frequent swings in both the index and in the underlying market exuberance.
It is worth mentioning that December is usually a good month for the market. It is worth mentioning that initial concerns about a COVID variant may be overblown. It is worth mentioning that inflation may just be transient.
The S&P gained 2.5% in August closing out another month where there was a mid-month drop followed by a recovery prior to month end. All three model portfolios on this site are doing well (results since January 31):
The ETF Retirement fund is traded using a simple proposition — price versus the long term moving average at month end. If the price crosses the moving average during the month and stays there, the trade is made.
The S&P 500 composite closed up over 2% higher in July than it did in June. But underneath that statistic are some troubling data.
When looking across all sizes of companies (S&P100, S&P 400, S&P500, S&P 600) there are negative trends in New Highs vs New Lows, Advances v Decliners, and % of stocks above their 21 day moving average. The market typically leads the economy by six months. Economic data is still favoring Expansion versus Contraction, but now only by a score of 5-3 as opposed to 6-2 or better in recent months.
The ETF Retirement Portfolio is managed using a George Dagnino variant model where an initial BUY is made if the price is above the long term moving average on the last day of the month, and a SELL is made if the price is below the long term moving average on the last day of the month.
The S&P 500 tracking ETF SPY rose 1.3% in the month of June. Analysis of the FRED economic data show that the economy is still in Phase 2 (late growth cycle), which is good for equities.
The ETF Portfolio technical investing algorithm calls for a July 1 investment in International Bonds (EDV), Emerging Market Bonds (EMB), and long term Treasury bonds (VCLT). This is consistent with increase in the flow of monies into bond funds, which indicates that people are hedging these equity ETF bets. There is too much money chasing too little sources of return, so even low paying bonds are getting play here.
The S&P closed flat for May, rising slightly from 4190 at April end to 4200 at May close.
For the ETFs in our Retirement Strategy, those that remain LONG:
ETFs transactions for end of May:
No Activity:
I am working on a system that will help guide us as the market tops and corrects. See the chart below.
Consider the following settings:
Slider=1000: looks back for the last 1000 trading days
shortperiod=20: uses a 20dma as the short term average
Last Wednesday I presented to ATAS on a multi-indicator system. The presentation was entitled “A 68 Indicator, hard ranking system using Amibroker”. The essence of the exploration is that if one can get various technical trading strategies to compete, one could use the survivors to predict the future trend.