Saturday, January 30, 2010

EFA weekly chart

The EFA weekly chart showed MA-4 crossed below MA-18 and the closing price is near the MA-39. The candle bars from the last two weeks looked pretty nasty. However if this position was entered in May 2009, there should be some healthy gains even it got stopped out this week.

(click image to enlarge)

Markets retracement is occuring

Both Emerging Markets and International ETFs got hit pretty hard and hit its 8% stop loss from its entry. 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 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.

Thursday, January 28, 2010

EFA and EWY hit the daily stops

The DOW dropped another 116 points and S&P 500 lost 13 points. Both EFA and EWY hit the 8% stops at the market closed on the Ocean Portfolio. Normally the stop applies to the weekly chart which follows the market closed of the week (Friday closed). I will wait until tomorrow market closed to take action if appropriate. At this point, it doesn't look good but I just stick to my rule.

Sunday, January 24, 2010

What a week for the markets

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.

                                (click image to enlarge)

Thursday, January 21, 2010

Stopped out on EWZ and ILF

Both EWZ and ILF hit the 8% stop loss today from its entry and both ETFs were out at the market closed. Keep the cash on the sideline for now and rebalanced the portfolio with proportional ratio of 20% each for easy calculation. Will continue to monitor the market trend.

Wednesday, January 20, 2010

Add TUR in Ocean Portfolio

Sold FXI and added TUR with 20% in the Ocean Portfolio at the market closed today. Close price of TUR was $58.89. FXI resulted with a small loss of 1.12%

Sell FXI at the close today

In my simulated Ocean Portfolio, I will sell all FXI at the close of the market today which is equal to 20% of the portfolio. FXI is near the 8% trailing stops since the acquisition on 12/11/2009.

Tuesday, January 19, 2010

Sold FCX in Traders Pick Portfolio

Sold FCX for a 3.42% gain and started a new position with TUR on 1/19/2010

Monday, January 18, 2010

Moving Average Crossover Index - MACI

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


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 market closed and see how it will play out.

Saturday, January 16, 2010

SPY daily moving average and performance

SPY does not work so well using the daily moving average of MA-4, MA-18 and MA-39.

                                (click image to enlarge)

FCX daily moving average and performance

FCX works well using these daily indicators. Chart showed the result of FCX from its inception.

(click image to enlarge)                

SPY weekly chart as of Jan 15, 2010

SPY weekly chart indicated that the one day drop of 12.43 points should not be worried since it is still trending upward.

(Click chart to enlarge)

DOW dropped more than 100 points. So what shoud we do ?

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
3. GLD
4. XLK

I will show some results of the back-testing in the next few threads.

Sunday, January 10, 2010

Fundamental Analysis in Emerging Markets

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 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.

Top 5 Countries within EEM
Country ETFs are another great way to find undervalued opportunities. Following are the top 5 countries and their ETFs within EEM:

Fund (Symbol)
MSCI Brazil Index Fund (EWZ)
MSCI South Korea Index Fund (EWY)
FTSE/Xinhua China 25 Index (FXI)
MSCI Taiwan Index Fund (EWT)
MSCI South Africa Index Fund (EZA)

Over the past decade China has spent massively on roads, bridges, ports and other infrastructure. Even though China's infrastructure is already superior to that of many other developing economies, it still continues to expand: now it focuses on high speed railroads and subway.

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, click this link.

Wednesday, January 6, 2010

Interest Rate Policy: Outlook for 2010

Will interest rate remain the current level which is considered to be very low now? It is under pressure as Christine Birkner of had written in this article:

Christine Birkner (published 1/1/2010):
"Whether 2010 will be a year when the economic recovery begins to take root could depend on what happens in the Treasury complex and the outlook for interest rates. The global economic crisis kept interest rates frozen near zero throughout 2009. In a November speech before the Economic Club of New York, Federal Reserve Chairman Ben Bernanke reiterated the Fed’s stance that economic conditions would warrant low levels of the Fed funds rate “for an extended period.” The Fed’s actions likely will weigh on the dollar and the economy at large in 2010."
Analysts expect Treasury yields, which are relatively low, to climb a bit in 2010. “I can’t imagine [Treasury yields] moving much lower. Until the Federal Reserve implements policy action, these rates will be reflective of supply and demand for safe assets,” says Mike Kimbarovsky, principal, Advocate Asset Management. “[Three-month Libor] would be the first to react to any uncertainty or volatility [in the market]. It will maintain a low level until there’s uncertainty, and then it’ll spike.” 
For a full story of this article, click here.

Friday, January 1, 2010

Ivy League Schools Invest Heavily in ETFs

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) and 2) 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.