Wednesday, December 17, 2014

UDOW Interactive Stock Chart | Yahoo! Inc. Stock - Yahoo! Finance

UDOW Interactive Stock Chart | Yahoo! Inc. Stock - Yahoo! Finance



Here is a chart of UDOW, the 3x Dow ETF.  I bought UDOW today because I believe there will be a Christmas rally although I don't know how long it will last.  I will probably sell UDOW when it gets to around $142 per share in order to preserve my profit for a 12% gain.  I performed a similar trade back in October-November for a 7% gain in UDOW.  So, in the space of three months, I am expecting to book a total of 19% profit on UDOW trading money for one quarter of the year while this represents only 15% of my portfolio just in case I am wrong.



My reason for buying UDOW today was two-fold.  First, the stock market had declined by about 5% from its previous high similar to the October pullback of 9%.  Since I knew the economy was doing okay, I was willing to bet on a bull rally.  Secondly, $NYMO, the NYSE McClellan Oscillator, showed a very oversold condition of -81 on December 16.  It was also oversold back in October when the market bounced off the bottom.  So, these two reasons prompted me to buy UDOW today soon after the market opened.



As good as this trading plan sounds, you still never know what the stock market will do.  That is why I maintain a diversified portfolio with the other 85% comprised of long stocks for either capital gain or dividends along with bond stocks for additional diversity.  I don't know how many pullbacks we will have in 2015 that will be a big enough decline for a worthwhile trade, but I want to seize the opportunities when I get them.  I am hoping for 6 to 8 chances per year.  If I make an average of 9.5% on 6 trades per year, I will be making 57% each year on my 15% allocation of trading money. 




Monday, December 15, 2014

Cramer Remix: What I'm waiting to see in oil

Cramer Remix: What I'm waiting to see in oil



This is a good article by Jim Cramer on why the stock market continues to fall along with the price of oil.  Certainly there is a connection between oil and the S&P 500 since many oil companies are in the S&P group, but good companies like Apple and Skyworks should not be falling.  The healthcare stocks like XLV and PJP should not be declining either.  Thirdly, December is the best month of the year for stocks, and the magnitude of this pullback is hard to understand.  As Cramer said, it could be the hedge fund computers giving bad information, or it could be year-end tax selling.

Saturday, December 13, 2014

Energy Sector Woes Continue To Weigh On Market As Risks Of Default Increase | Seeking Alpha

Energy Sector Woes Continue To Weigh On Market As Risks Of Default Increase | Seeking Alpha



Chris Puplava has written an outstanding article about how oil prices have fallen so far and so fast.  This happened to a lesser extent in 2011 and 2012 when speculators sold off massive long positions.  I have made money on oil in the past and I have lost money.  It all depends on being on the right side of the trade at the right time.



Chris mentioned that we also have a high oil supply chart while demand for oil has been dropping.  He stated that Americans are using 2 million barrels of oil less today than we used in 2007.  This is also at a time when America is pumping millions of barrels of extra oil that we have not had in years.  Moreover, electric cars and natural gas vehicles are finally having an impact.  Therefore, oil will probably be a losing trade for quite a while.

Crude Oil Futures Quotes - CME Group

Crude Oil Futures Quotes - CME Group



Here is a website page from the CME Group where you can view oil futures.  As you can see, oil prices have been revised downward, and the price of oil is expected to remain low for quite some time.  Therefore, it will be difficult to make any money on oil stocks.  However, cheap oil should be good for transportation stocks and the economy.  I am buying IYT, the transportation ETF, on Monday and I will probably add to my position on any significant downturns as long as the economy remains intact.  IYT has gained 26% so far in 2014, and I expect continued gains going into 2015 and possibly 2016.




A Growing Black Cloud Over The Market | Seeking Alpha

A Growing Black Cloud Over The Market | Seeking Alpha



Eric Parnell has written a great article about how the high yield bond market as represented by HYG is intertwined with the stock market in general.  He mentioned specific oil companies that are involved with HYG, and he talked about how some of these companies have experienced a large downturn.  Moreover, Eric discussed how the stock market could be eventually pulled down by the tanking of the oil sector.



My best performing stock right now is TMF, the 3x long treasury bond ETF.  It goes up when the market goes down because people will rush to safety in government bonds.  I think the downturn is just temporary, though, because the economy is okay currently.  The hard part will be picking an intermediate bottom from which stocks will rebound.  I will be monitoring $NYMO, the NYSE McClellan Oscillator, for a possible bottom around -60 or lower.  At that point, I will sell most of my TMF and go long on stocks like UDOW or MIDU.

   


Friday, December 12, 2014

U.S. Stocks Sink With Global Equities as Oil Rout Worsens

U.S. Stocks Sink With Global Equities as Oil Rout Worsens



The expected December rally probably won't come this year.  We are already in a 4% hole for December, and if a rally does occur this month, we will just get back to even.  The Dow lost 3.8% for the week, the S&P 500 lost 3.5%, and the S&P 100 (OEF) lost about the same.  Large cap stocks are no longer a safe haven.



We don't know yet how far the market will fall.  It could be another 9% decline like we had in October.  TMF and other treasury stocks are among the few current winners.  When the stock market finally finds the December bottom, I will probably be buying UDOW for the ride back up.  The economy is actually in good shape, and that is why I think the market will eventually recover.

Thursday, December 11, 2014

iBillionaire – Investment Ideas from Wall Street Billionaires

iBillionaire – Investment Ideas from Wall Street Billionaires



Here is an excellent website where you can get acquainted with successful billionaire investors and some of their holdings.  The site lists the top 10 index holdings on one page along with a chart of how the billionaires are doing compared to the S&P 500.  The home page shows current billionaire winners and losers.  Another page gives a link to Direxion's website where you can learn about the billionaire ETF, IBLN.  You can't go wrong for long by following the billionaires although nobody will be right all of the time.   I intend to stay in touch with what the great investors are doing.