Weekend Report
by Dr Invest

We have been using the Ivy Portfolio Method, starting our investment in May. Seasonal charts show that in May, stock prices decline and bond prices rise.  We have used a theoretical $10,000 portfolio, dividing the $10,000 into three parts. These three parts are CASH, STOCKS, and BONDS with $3,333.33 deposited into each of these categories. (See the blog for May for details)

To further reduce risk we divided the BOND category into three parts, with each part represented by $1,111.11. Our BOND investment was made into two BOND EXCHANGE TRADED FUNDS: BND and TIP. On May 2nd, $555.55 was invested into BND and $555.55 was invested into TIP. The rule for the Ivy Portfolio Method is that if the price of the ETF remains above the 10 month SIMPLE MOVING AVERAGE on the first of each month, you are to continue investing into the ETF.

The price of our investment into BND and TIP did remain above the 10 month SMA on June 1st, so we purchased another $555.55 of BND and another $555.55 of TIP. Since the price of BND and TIP will remain above the 10 month SMA on July 1st, we will purchase another $555.55 of BND and another $555.55 of TIP.

Note: the red-line is the 10 month SMA or 217 day SMA. The price of TIP is clearly above the SMA and indicating that a purchase can be made.

Tomorrow, we will have 1/3 of our total theorectical portfolio of $10,000 invested into BOND ETFs. Between the blend of BND and TIP BOND ETFs, a total of $3,333.33 will be invested. This is what is called, TAKING A POSITION. One third of our portfolio will be positioned to take advantage of a downward movement of the market in August and September.

Will the market decline in August and September? There is really no way to know, but our SEASONAL CHART shows that on a 30 year average, the market has declined over those months. Buying a POSITION in Bond ETFs will place us in the market when BONDS are most favorable to rise.

STOP-SELL: I will place a stop-sell at 3% below the purchase price of BND and TIP. This is done by taking the PURCHASE PRICE of the ETF and multiplying by .03. For example:

TIP is purchased for $119.70. Multiply $119.70 * .03 = 3.591. Now subtract $3.59 from the purchase price of $119.70. Your STOP-SELL will be SET AT $116.11. If TIP falls to $119.70, it will sell. If this is the first STOP-SELL you have ever SET, call your brokerage help line and they will assist you in placing your first STOP-SELL.

CURRENT PORTFOLIO PERFORMANCE: After two months the total portfolio performance for BND and TIP has been .03%. I expect that July will keep a sideways movement with a decline the market in August through September, giving BONDS a boost and a gain in our investment position. Most important, keep your STOP-SELL updated.

OVERALL MARKET OUTLOOK

John Hussman gives an excellent overview of the present market outlook. Please read carefully.
http://www.hussman.net/wmc/wmc120625.htm

GOLD

Let's talk about STOCK PATTERNS. Here is what is commonly called a FALLING WEDGE which typically indicate a coming uptrend.


Now let's look at our gold prices in chart form, looking for the FALLING WEDGE PATTERN.

I would speculate that Gold prices could break upward in the next 20 to 40 days. It seems that this upturn in Gold prices will coincide with the expected downturn of stocks in August to September.

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