Seeking Alpha

The Social Scie...'s  Instablog

The Social Scientist.
Send Message
born 1947. retired economic geography academic. traded mutual funds with my retirement plan into an early retirement. Currently trying to make more than I spend mostly via ETF's. I'm a Dutch Kiwi Texan.
  • Liquidity System Sell Signal 8/1/2014 1 comment
    Aug 1, 2014 9:14 PM | about stocks: XLF, TLT, IWM
    Delete]0 comments

    Aug 1, 2014 7:20 PM | about stocks: XLF

    The Russell 2000 dropped below 1114.62 today, which is 2 ATR's below the level where it was bought on May 27. XLF did not confirm the signal, but it means the system sells IWM (and PTY) today.

    System 1 had 833 shares of IWM. At 3.55 p.m. the shares were $110.63; so that fetched $92,154. The shares also paid a dividend of $.46; so that's another $383 = $92,537. At 3.59 p.m., TLT was at $114.58; so 807 shares were bought.

    System 2 had 420 shares of IWM = $46,464 plus $193 in dividends =$46,657. The system also had 2544 shares of PTY, which had a price of $18.14 at 3.55 p.m. So that fetches $46,148. Two dividends totaled $.26 = $661, for a total of $46,809 from PTY, and a grand total of $93,466. That bought 815 shares of TLT at $114.58.

    The first signal since I started posting the system was a sell on Feb. 3, 2014. That day the Russell closed at 1094.58. Including dividends, today's close of 1114.85 is equivalent to a total return of 2.55% since then. System 1 is down 7.46%, and system 2 is down 6.53% in that time frame.

    Maybe you can't time the market, but I am persisting. Bull markets end in lengthy topping processes (usually), that can and do whip-saw many traders and timers. It may happen again because XLF is at $22.21, and the system indicates a buy if it goes above $23.06 at any time during the next 13 trading days.

    My own thoughts are that if it does, it's a last gasp. The riskier high yielding assets (junk bonds, master limited partnerships (NYSEARCA:AMJ), mortgage Reits) have dropped sharply in the past few days suggesting a risk-off trade. The R2000 is up 5.2% yoy compared with 12.6% for the S&P 500. French 10-year bonds yield 1.51%, and they are more bankrupt than us, and don't have their own central bank to buy those bonds. It's nutty Margin debt has gone back to its Feb. peak, although I've decided that margin debt is not a great indicator, because it coincides with market moves. It drops when the market drops. The bull-bear ratio for Investor's Intelligence has been above 3 for many months this year. It too is a lagging indicator, in that the percentage of bulls drops when the market drops, and rises when the market rises. But, who is left to buy stocks, especially when the Fed is slowing the rate of infusion of liquidity.

    Finally, August and September in the second year of the Presidential cycle is usually bad. There's no good reason why it should be, except that it is now well known that this has happened in the past, and so it's another incentive to step aside.

    Disclosure: The author is long TLT, NLY, REM.

    Stocks: XLF, TLT, IWM

    Disclosure: The author is long TLT, NLY, REM.

    Stocks: XLF, TLT, IWM
Back To The Social Scientist.'s Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (1)
Track new comments
  • The Social Scientist.
    , contributor
    Comments (356) | Send Message
    Author’s reply » As of today, Tues. 8/19, XLF still must surpass 23.06 intra-day on Wed or thurs. to buy IWM. That level changes to 23.00 on Friday unless 23.00 has been surpassed on wed. and thurs. If so, the new high, that is lower than 23.07 becomes the next buy signal. I buy when the high of the previous 20 days is surpassed.


    System 2 buys 50/50 IWM and PTY.


    I fully expect the market to surpass these highs, and then turn tail, but I don't know the future any better than Nostradamus did.
    19 Aug, 05:34 PM Reply Like
Full index of posts »
Latest Followers


More »

Latest Comments

Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.