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The Social Scientist.
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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 Buy Signal 8/21/14 3 comments
    Aug 21, 2014 6:11 PM | about stocks: IWM, PTY, XLF

    XLF went above 23.06 today (8/21/14), which is a signal to sell TLT and buy IWM.

    System 1 had 807 shares of TLT. At 3.55 p.m. the TLT price was $116.59. No dividends were paid since 8/1. So the sale of 807 shares fetched $94,088. The 3.59 p.m. price for IWM was $115.22. So 816 shares were bought. The system made a little money, but it paid a much higher price for IWM than where they were sold.

    System 2 had 815 shares of TLT. They fetched $95,020. Half that is $47,510, which could buy 412 shares of IWM. At $18.60 per share, the $47,510 bought 2570 shares of PTY. This was also bought at a much higher price than it was sold for on 8/1.

    Since Feb. 3, 2014, the Russell 2000 is up 5.98%, and 2 dividends have been paid. System 1 is down 5.91%, and system 2 is down 4.98%.

    The bubble continues to inflate with September and the end of the taper approaching. But, perhaps the bubble can continue its inflation. Otherwise, the stop-losses are fairly tight.

    Go back into TLT if XLF drops below 22.63, or the R2000 drops below 1133.14. These values will not vary much for several weeks.

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

    Stocks: IWM, PTY, XLF
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  • The Social Scientist.
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    Author’s reply » With the R2000 approached a sell trigger, it's time to up-date where IWM is sold and TLT is bought. For Tues. 9/16, those levels are 22.66 on XLF and 1135.07 for the R2000.


    XLF has held up very well, and the R2000 is diverging badly from the big caps. as it has done all year. One year I will suck it up and just go to cash at the end of the first week of September. I just can't get the month right.


    At least if IWM is sold again the system will get TLT fairly cheap. Still don't know what happened to it the past 2 weeks. With Japan continuing QE, and Europe starting it, both trying to create inflation, those currencies should drop, which they did, and send money into US Treasury bonds. We're ending QE, which should be disinflationary, if not deflationary, and so our bonds should be attractive. But, oh no, crappy sovereign European bonds like Spain and France yield yield less than the US T-bonds. They do have higher real interest rates than us, but investors are betting that their inflation rates won't increase despite the ECB's QE, and that our inflation will increase, despite the end of QE, because our economy is strong. I'm skeptical. If Europe does not have inflation, their debt burdens worsen.
    15 Sep 2014, 08:28 PM Reply Like
  • The Social Scientist.
    , contributor
    Comments (435) | Send Message
    Author’s reply » for 9/17 R2000 sell level is 1135.18, and the Xlf sell level is 22.66. IWM and PTY is sold at 3.55 EST if one of these levels is touched, and TLT is bought at 3.59 p.m.
    16 Sep 2014, 05:04 PM Reply Like
  • The Social Scientist.
    , contributor
    Comments (435) | Send Message
    Author’s reply » for 9/22, the sell levels are 1135.18 on the R2000, and 22.64 for the XLF.


    Odds are pretty good that the R2000 level will be hit, because this time of September has been pretty bad for small caps in the past. The odds are then good that XLF will issue a new buy signal, because the buy trigger is a 20-day high on XLF, and it's close to that.
    20 Sep 2014, 02:32 PM Reply Like
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