Today's Market
by Dr Invest

There are really no real changes in the market to report. Now is not the time to be in the market. Sure, we have seen a dramatic rise in the market this week, only to see the market dramatically fall the past two days. This kind of cycling, up and then down, simply shows that the Bull Trend is getting a bit tired.

Andrew Horowitz pointed out that the Spearman Indicator is revealing these signs of weakness and that a downturn is eminent.

From the chart below, there is confirmation by the Bloomberg Trend/Stall study that a near-term high was reached and now a stalling condition is present. The Spearman is also rolling down. Now to get a confirmation, the Spearman needs to dip below the zero line.

That may occur with a couple of more stall days or a turn sharply lower (greater than 1%) on the S&P 500 index. That may be a time to either hedge out or consider lightening up long positions. From there, a short could be implemented through an ETF or options strategy.

Just a quick heads up….

The Bloomberg Trend/Stall Indicator:

TrendStall identifies points at which a trend is losing momentum and is likely to stall or consolidate. The determination is based on a Rate of Change of the ADX. The parameters for the ADX, Rate of Change, and Moving Average of the Rate of Change are user adjustable.

The bar that has been determined to be the ‘Stall’ point is marked by a triangle above or below that bar. The price bars leading up to a TrendStall signal are painted a different color to alert the user that the TrendStall histogram has risen above the threshold level confirming a trend is in place and a stall is imminent. The period after the stall bar may also be painted on the price chart, depending on the value of the histogram (ADX ROC) in relation to a moving average of that value. This ‘paintbar’ period is often valuable as an indication of a slightly longer stall confirmation.

So what is the Spearman Indicator telling us? At least to Andrew Horowitz, we will enter a downtrend in the weeks ahead. This is really all that you need to know, the future doesn't appear bright and investing at this time will be into a "sucker's market".

Knowing that the best season for investment starts in November, I am reluctant to invest at this time. My prediction is that the market will move downward; but even if it doesn't, the best time to invest will be this fall.

I can't assure the validity of the Spearman Indicator but I will be watching to see if the market turns downward as predicted. My wife recently asked, "Why aren't we in the market since it is doing so well." There is a pressure to make your money work, but the potential risk is too high.  Rule number one.... "Don't loose money!"  This is the objective, to assure that your minimize risk and maximize your return.

Loosing sight of the objective puts your entire portfolio at risk.  Buying at the "right time" gets your portfolio invested with some profit to spare, so you can handle a 10% or 15% loss and still make a profit. Be patient, you will make money.

(note: For entertainment purposes only, not to be used a investment advice.)

Today's Market
by Dr Invest


You might wonder if I am on vacation... and in some way, I am. Psychologically, I am disconnected from buying into the market right now.  In spite of all the "hype", the bull is drowning.

Here are some of the headlines on Yahoo Business today: "An Improving Economy Means Republicans Need a 'Plan B' to Beat Obama", "Goldman:Best Time in a Generation to Buy Stocks, Sell Bonds", "Home sales show strength, prices rise".  Companies with a "vested interest" in your money are applying pressure to MAKE YOU PUT YOUR MONEY INTO THE MARKET. After all, if the headline is correct: "Buffett Seizes Lead in Bet on Stocks Beating Hedge Funds", then all of us need to empty our bank accounts and buy up those stocks while they are cheap.

Here is a more appropriate headline for today's market: "When Wall Street Is Bullish, Investors head for the Exits".  The theme goes something like this: All of Wall Street's wildly bullish calls on stocks may be having just the opposite effect, driving wary mom-and-pop investors out of the market despite the long-standing rally. After all, they've been down this road before: One big-name analyst after another advocates a buy, buy and buy some more strategy, only to see a bubble burst that ends up trapping late-to-the-game individual investors.

In just the last week alone investors pulled another $126 million out of stock-based mutual funds and shoveled $10.7 billion into bond mutual funds, according to the Investment Company Institute.

The total outflow from stock funds was comparatively small to recent weeks, but the move is significant in that U.S-based stock funds, despite a stunning gain of more than 30 percent off the October lows, lost nearly $1.4 billion.

"There's a feeling that another shoe is going to drop somewhere, and they don't want to be caught in a situation where they can't get out," says Quincy Krosby, chief market strategist at Prudential Annuities in Newark, N.J. "What they don't want to get involved in is some trap that is being set by hedge funds or asset managers to get in so (the managers) can get out."

http://finance.yahoo.com/news/wall-streets-bullish-investors-head-195422829.html

Wall Street is wondering how, in spite of their barrage of their media misinformation that the time for investment has never been brighter, the little investor could possibly STAY OUT OF THE MARKET.

How could the "little investor" possibly think that the STOCKGAME was RIGGED. After all, they have all their investments hedged and sophisticated algorythms to tell them when to run. As the "little investor" you only have your wisdom to keep you from losing 1/3 of your portfolio.

ADVICE FROM JOHN HUSSMAN

Go to Hussman Funds and review their research for March 19th, 2012. Read all of it carefully. Yeah, a bit boring, but you need to be wise and understand all the free market advice from MSN or Yahoo is provided by people who want to get into your bank account and pillage your money.

Dr Hussman refers to "BOLLINGER BANDS". Go read up on the Bollinger Indicator so you can understand what the indicator is showing on a graph. In short, the upper band is showing that most stocks are OVERSOLD. This means that you are PAYING TOO MUCH FOR A STOCK.

This always indicates a radical downturn in the near future. Dr Hussman explains that some of his clients ask, "Well, why can't you position me so my portfolio can take advantage of continued upward climb of the market?" Dr Hussman rightly points out that one cannot predict when the downturn could take place. For example, If I bought the DOW JONES index on Monday, today it would have retreated around 1%. I don't really know if the market will continue downward... and the likelihood of the market moving downward from an all-time-high is greater than the market continuing upward. Are you getting it yet?

Why attempt to risk a large percentage of your portfolio in the market when it is most likely to turn downward? This is just good common sense. My take is that if we see a significant downturn before the election, you could see 6% to 12% gain in the fall. You don't need to make any more from your portfolio than that. "Pigs get fat, hogs get slaughtered."  Don't take a chance for a loss when the game in not in your favor. If "little investors" will keep bidding up the price, and some will, the professional traders will escape with the money and the retail traders (that is you!) will not find it funny.

For your investment's sake, go to Hussman Funds and read the Weekly Market Comment. http://hussmanfunds.net/wmc/wmc120319.htm

IF I WERE YOU

If I were you, I wouldn't take a chance at investing into the market at this time. Yes, I know, APPLE, APPLE, APPLE; but a market downturn doesn't care how well Apple has done or whether they are paying a dividend. If the market turns downward, so will the Apple stock.

The market follows CYCLES.  We are at the top of the cycle at this moment. The market has remained flat for the past 11 years, largely due to debt. It doesn't seem to me that we are going to escape this FLAT market and now that the high has been hit, we will see the market cycling downward, to hit a new bottom.

The S&P 500 Index shows us the sideways motion of the market. Check out the graph below:

For the past 11 years, your portfolio has gained little. A "buy and hold" method was quite lucrative from 1975 to 2000, but after 2000, investors have lost as much as they have gained. Even if the market once again hits the top redline, it is not worth the gut wrenching experience of not knowing when your entire portfolio may fall into risk.

As I said in January, stay out of the market. There are better days ahead with lessor risks.

(note: the above information is for entertainment purposes only and not to be used as investment advice.)

Today's Market
by Dr Invest


So here we are, the market has just had a break-out and continues to move strongly upward... and with no end in sight. The DOW moved above 13,000 today, suggesting a strong advance.

What could be moving the market? GAMES, GAMES, GAMES is the answer. The Federal Reserve is playing a dangerous game in which we all are forced to participate. You can't add billions in liquidity to the market, which is equal to printing money, without seeing INFLATIONARY PRESSURE.

We are seeing the price of stocks advance on the increased liquidity imposed on the market by the FED. We are also seeing an increase in the price of commodities. Your gas is higher, your groceries are higher, in the months ahead the cost of saving the U.S. from financial collapse, wil be rising costs. Rising costs means RISING PROFITS. These profits come not from increased buying, but from increased costs. The consequent rise in stocks is only smoke and mirrors, IT IS A GAME!

More and more pressue is being put upon the investor to buy stocks to keep from loosing the value of his portfolio. The contradiction here is that you can't afford to stay out of the market and you can't afford to get into the market.

Dr John Hussman at Hussman Funds wrote this week, "There's one question you need to ask yourself before investing in the market right now: Do I feel lucky?" A break-out typically signals a bull market for the months ahead. So you have to ask yourself: Is this the start of something big over the next few months, or is it the end of a six month uptrend.

I can't answer that question, because we are all guessing. I can't tell you how much in real dollars, the federal reserve has inflated the market. I can't tell you when that inflation will begin to show its ugly head in the market. All I know, is that a some point you will have to hold-your-nose and jump in.

Methods with Promise

Fortunately, I have provided to you some ideas that follow the "Ivy Portfolio". This method centers around long-term investing with a twist of selling when a selected group of ETFs fall below the 214 day simple moving average (SMA).

This is likely the safest method to use at this time, but don't put all your investment money into one method. If you have been out of the market, make your move back into the market slowly. Remember the FIRST RULE of trading: Don't lose money!

Let's say you have $100,000, divide it by 3. You now have $33,333.33 for each of the three parts. Take half of $33,333.33 to make your first investment into an EFT. Those following the "Ivy Portfolio" would invest $16,666.65 into an ETF called, VTI.  VTI is an EFT index in US stocks. You would hold the remaining $16,666.65 for investing after you have seen some PROFITS in the original investment into VTI.

In theory, once the EFT called, VTI gains 5%, you invest the remaining $16,666.65 into VTI. If the market suddenly dropped, you would lose only a minimal amount before the stop-sell engaged. This is the best way to limit your risk.

With another third of your portfolio, amounting to $33,333.33. You invest $16,666.65 into BND, VNQ, VEU, and DBC. (VTI is the fifth ETF of the Basic Ivy Portfolio) Only use these EFTs. Don't buy EFTs if below the 214 day moving average.

DO NOT buy an EFT without also placing a STOP-SELL on the EFT. See my video in the sidebar to learn how this is done on OPTIONSHOUSE trading platform.

For all the details, select MODEL ETF PORTFOLIOS in the sidebar and go to the bottom to read the ProFolio Model. You will find instructions on how to setup your EFT chart and 214 day moving average. Please keep the same EFTs that the Ivy Portfolio has suggested for their portfolio.

If you have questions, you can leave reponse on this blog.

Being Patient

I am inclined to hold-off just a bit longer before returning to the market. It is all the reasons that I have previously mentioned that makes me timid to invest now. The market continues to climb without any real fundamental reasons for climbing other than "crowd mentality".  Furthermore, the stock market cannot continue to rocket forward indefinately.

I do see opportunity at the end of October, until January and February of 2013. So at this time, I keep reminding myself about the benefits of waiting.

Let me remind you, that since the fall of the market in 2008, the market has now grown 100%. Thats an average growth of 20% per year. It is a fall in the market that sets you up for great returns, just don't be in the market when the fall occurs.

(note: the above information is for entertainment purposes only and is not to be used as investment advice.)

Today's Market
by Dr Invest

Watch the Sun! It might tell you of things to come. Around Scientists predicted that sunspots would peak around June of 2008 and then move toward a decline.  (search: sunspots.pdf).

Found on Google Docs is "Sunspots, GDP and the stock market". Written in May of 2007, the assertion is that in 2008 the market will retract because of a decline in sunspots. Laughable, isn't it!

But what if the correlation is correct?  A technical analyst, Charles Nenner thinks it is and predicts 2012 to be a year in which the sunspots peak and then decline once again and concurrently the stock market will do the same.

Markets Behaving Badly

Today, we are less likely to judge the market by a "natural course of events" when the government is using an "unnatural method" of putting liquidity into the market to sustain growth. (IE: twist, economic stimulus, etc.)  Germany inflated their currency during WWII until it the currency was worthless, and the along with the nations led to slaughter, were the German people themselves.

Before we start down this path of using the German Government of WWII as an example, we need to only look to ourselves to see our own Militarism and the manipulation of currency here in the U.S. and ask if we are not moving down a similar path. My point is this, you can make your market look any way you want it to look if you rewrite the rules. If I print money on my color printer, I go to prison; if the Federal Reserve prints money on their printer, the chairman gets a slap on the back for doing a good job. Markets behave badly, because people behave badly.

If it becomes known that CEOs are becoming billionaires through insider trading, smart people will not put their money in the stock market. If it becomes known that CONGRESSMEN are becoming billionaires from "insider information", people like you and me are going to invest elsewhere. If we learn that the Chairman of the Federal Reserve is "rigging the market", we are going to get out of the market. The market will collapse, businesses will fail, we will keep our money in a sock instead of a stock, and the government in sheer terror, will make promises to clean-up the "evil doers". Markets behave badly, because people behave badly.

About that Sun

I don't know if there is any truth to the market's connection to solar sunspot cycles. Perhaps the old contrarian adage: "When people are in the market, get out!" and "When people are out of the market, get in!" has equal value to the "sunspot theory". Either way, it is my belief that you should be out of the market right now. The market will decline and if there are the signs of recovery before the election this fall, make your money then. That will be the time that the incumbent president will need to shine and his political club will need to show that they are fully in control of the economy.

You will remember that in November of 2011, I purchased three stocks with equal investment going to each stock. FDO, DLTR, and CATM were the stocks. The average percentage over the three stocks was 6.54%. If you will remember the market was not strong and was very choppy until December of 2011. I know now that if I had stayed in the stocks, I would have gotten even more money. Do I regret selling? No!

Lesson number one, "Don't lose money." Lesson number two, "Remember lesson number one." Lesson number three, "Pigs get fat, Hogs get slaughtered." It is better that you were out of the market, wishing you were in; than, in the market, wishing you were out!

I see the stock market climbing and the temptation is great to jump in for the profits, but as you saw a few days ago the market turn down 206 points on the DOW, you can understand what a predicament you would be in to have just invested in several stocks or ETFs and then see the market move 200 points downward for a week.

Knowing that the market can abruptly move down can make a strong man weak and a tan man pale. I have boldly purchased stock and within minutes seen significant losses. I promised my self that if the stock didn't do better tomorrow, I would sell it. When it turned down for a second day, I promised myself, I'll sell it within the week. When you are setting on a $2,500 loss, you will be very timid about selling the stock, in hopes that your chosen stock will return to an uptrend. Later you will learn to be TIMID getting into the market and BOLD in getting out of the market.

This paragraph is truly for entertainment purposes. Jerry Seinfeld suggests to George Costanza that if what he always does fails, he should do the opposite. George declares that from now on, he is gonna be "opposite George". Sure enough, he does the opposite of what he would normally be inclined to do, and it results in George finding successive wins. Sadly, most investors make decisions that will cause them to fail and then say, "I'll never invest again!" It wasn't the investment that was the problem, it was the investor. Be "opposite George" for awhile. At least consider that if everyone is buying, you might need sell.  AT LEAST, PUT A STOP-SELL on your STOCK.

While I am rambling, I watched the PBS Nova special, "MIND OVER MONEY" several years ago. The other night, there was a re-run of "Mind over Money". You will find that academic research by universities are the most reliable when it comes to building a 'TRADING MIND and METHOD". Of interest was a segment on students, brought in for studies on the psychology of trading. It was found, that even when the value of a stock was going down and the likelihood of achieving gains were diminished, the students kept bidding the stock higher in hopes of finding returning profits.

What does this mean to me? The real market works the same way. When the underlying markers of a market are moving down, people keep bidding the prices higher in hopes of achieving profitable returns. It is only when the market collapses and hopelessness prevails, that price destruction ensues and the opportunity for profits rise once again.

Please read my blogs for the past two months, read the Hosington Reports and draw your own conclusion. Prices of stocks are moving higher, there is no basis for the rise in prices, and in fact, the underlying market indicators point toward a recession. Be patient now. The market will turn downward. If we are not at the onset of a recession, you will have an opportunity to gain 8% - 12% this fall.

NEW VIDEO RELEASE: Go to sidebar under PAGES in the right-hand column and select VIDEOS BY DRINVEST. You will see how to BUY and place a STOP-SELL on the OPTIONSHOUSE trading platform. (the older platform)

(note: the above information is for entertainment purposes only and not to be used as investment advice.)