Maybe it’s all the green on the screen so far… but already after looking through things a bit more, I a am less bleak than I was earlier. I had commented on Philip John’s last post that after yesterday’s sell-off, I was ready to sell into today’s bounce to move to about 75% cash from 10% cash.

I’ve decided to make no move today. Today is likely to be a nice up-recovery day. I need some time to think things through before selling long-term mutual fund and index positions. And I’m likely to do more damage selling early today than holding too long. Tomorrow would be a different story. We’ll see.

Part of my motivation to sell off so much is that I’m on vacation right now and would like to not have to worry about the market during this volatile time. (Day-traders are on to something with their owning no positions after hours.)

I’m also being very loss averse as after selling my GRMN at $81 (which it has bounced back above after a few shaking trading sessions) I’ve gone ahead an lost about $150 so far on two investments in Amgen (AMGN) and Bed Bath and Beyond (BBBY). I had had those stocks on my list as good value-TA plays that were counter-cyclical to GRMN.

Some New Positions – What am I getting Into To?
AMGN still looks good TA (although a bit of bad news – currently only in my E*Trade radar: “Medicare to reduce US payments for anemia drugs” – may damper things).

I think I pulled the trigger too fast on BBBY. BBBY is hurt by the current homes and home-builders weakness, and TA-wise it doesn’t look as rosey as I thought. I’d give it 50-50 on a turn around here, which isn’t really good enough to invest on. So I’m watching this guy like a hawk and trying to make back my quick loss.

The Oldies
I still have a position in eBay, which looks to have bounced off the 30DMA nicely. It’s up big today, I’m guessing in sympathy with the Amazon earnings. I need higher highs and higher lows in this one, and an open and close above the 10DMA. Some sell signals triggered past couple days, that look like a whipsaw but they could have been the real deal and this short burst upward is the whipsaw. Keep an eye on the 10DMA.

I was also considering selling the QQQQ, which has broken through the 10DMA and shown sell signals on the MACD and stochastics. (I wish I was at my home computer and could paste charts in here.) But a little bit of visual back-testing has shown me a couple things: (1) My TA indicators don’t seem to work so well on QQQQ. Last few times these signals fired, QQQQ simply traded sideways for a few weeks… not so bad. (2) Most of the move down (IMO) has happened already. More on this later.

Some Funds I Own in my IRA – My Schiztephrenia as a Trader
I also own some positions in the iShares S&P fund (IWS), the Janus Overseas Fund (JAOSX), and the Royce Opportunity Fund (RYPNX). I was tempted to sell these guys for similar reasons to QQQQ. TA is looking bad.

IWS (and S&P) still looks bad. In my comments to Phil John’s article, I say that I would go long SDS, which is a fund that shorts the S&P, so I obviously have to be short the S&P straight up. (I think if you read that again, you’ll get it.) … La de da de da. I need to rethink my position in this one. It’s meant as a long term position to keep pace with the market, but what does that mean if I’m using most of my money to play around. Can I do both of these strategies at once. How can I hold my position here if I think it’s going to go down (maybe an explaination later)?

RE JAOSX, this guy is shooting sell signals and below the 10DMA. This has happened before, and I could potentially save 5-10% but (1) a lot of that fall has already happened and (2) is it worth the trading fees and slippage due to my poor timing. Ditto RYPNX.

Timing the Market – How Big a Swing Do I Need to Expect to Make a Trade?
Here’s the thing: I’m trying to time the market. I don’t think I’m that great at it. I’m okay, but not great. And just how good do I have to be to actually make trades based on my timing hunches? I think this is a calculable number that I will try to get at later, but let me just give the structure of how this calculation might work.

I sold GRMN at $81, which is about $4 off its high (so far). If I had perfect timing, I would have had an extra 5% gain. The thing is this happens a bit, a few days later I can say $85 was a intermediate top. But now I’m already halfway down due to the time lag on my indicators or my own slowness in reacting or the time it takes me to confirm an indicator because I don’t want to sell to early, etc.

I think I could calculate my own % of slippage like this (maybe it’s 5%) and then calculate the % I’m correct on these decisions (let’s say 75% to be optimistic) and calculate how much I lose when I’m wrong and then figure out just how big a move I would have to expect to make a timing trade profitable. I need to recalculate those numbers, but it might looks like this.

I’m guessing there would have to be a > 10% downward move for me to warrant selling one of these stocks. And I don’t expect that. So I’m not going to sell.

I need to work on this and tweak the numbers, but I’d be interested in what other people think. Gotta go… off to Bush Gardens. I wish I had time to edit this. I hope that my stocks stay afloat today. Good luck.

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