Click chart to enlarge The chart above is an update of the Dow. We're nearing the top of the channel and moving average. When people ask should they buy or sell here, the answer is it depends on how invested you are. Which is why no one can really advise you. We're only 30% invested, with the goal of investing more into the indexes. If we were to sell any part of our holdings, it would only be tempting at 7800 or so. And in that case, we'd only be selling the portion of our shares which were bought at 6800. We're not focused on selling, but rather on continuing to accumulate shares for the long term. That is, until a new leading sector emerges. At that point, we'll shift from the indexes to the leaders of that sector. That shift could be a couple years away.
We have inside knowledge of the health of the high end real estate market. It is an excellent barometer of the health of the overall economy, and perhaps even a crystal ball. We find that after a two year lull, wealthy speculators are starting to buy land and build houses again. It may seem early, but these are people with close ties to the major brokerage houses in New York. Billionaire investors are scooping up land at firesale prices, and are beginning to revitalize the otherwise slumping local economy. This is the earliest sign that a major turn in the economy is brewing. It will likely be about a year before this spending trickles down into the pockets of the plumbers and electricians and such, but the turn is coming. Our guess is that 6500 will be the bottom. A return to 6500 should be seen as a great opportunity, as it will not be long before others realize that a major shift in the economy is just around the corner.
12 comments:
Any one buying FAZ at this level?
JK
oh yeah. I just bought a chunk at 31. Rumors going around make me think financials are going to top out today at 2:30. Then you have the Fed jabberings which perfectly coincide. No matter what happens I'm sure FAZ/SKF will be profitable at this level if held for long enough. If not, it will break a very long-running pattern.
Are you familiar with the S-curve? It's a popular chart formation, the completion of which singals a top or bottom. Several charts look like they're in one now, including the indexes. It suggest that before any selloff, there will be a fast blow off to the upside. We're predicting the Dow will get very close to 8,000 in the days ahead. SKF and FAZ look tempting here, but it's just too predictable.
I dont care how predictable it is, I'm backing up the truck. The market has already priced in the Fed's tomfoolery. (That's the only thing that can really explain the rally.)
But devaluing the currency and pushing up commodity prices is no solution, and will simply squeeze more life out of the economy. Every time SKF is under 110, I always wonder if this time will be different -- if this time SKF is going lower. Well I'm not wasting my time wondering this time.
Im looking to get into FAZ myself. looking at the charts for financials everything seems to be approaching resistance levels while the inverse financial etf's are approaching or are at support levels. Just to chickenshit to pull the trigger.
Picked up some shares of FAZ at 28 this afternoon. I got C when it broke $1 and sold it back at $2 (Yeah, I sold them little bit too early but cannot take more risks at this market. You never know what happens to C once short squeeeeez is done and reality comes back to the market.)
1Q earning starts less than 2 weeks and I hope I can get some decent profit from FAZ.
JK
Are you sure buying FAZ is good here? GS just breakout of the 100 DMA and others are soon to follow. The turn around of the financial may a more legs to go.
You may be right, we might have some more up days ahead but once this bear market rally dies, we will see new lows on dow.
Helicopter Ben is throwing out tons of greens but do you really believe it will make any substantial effect to turn around the economy? As long as we continue to see (if not worse) dismal unemployment numbers, I do not see any dramatic change in fundamentals at least for this year.
Last time I got the FAZ, I was little bit early in early January but after 3 months of holding I did get nice profits. I just put 10% (holding 90% cash) to FAZ today and will just sit back and wait. It might not work to everybody but at least it works for me so far.
JK
http://market-ticker.denninger.net/archives/878-Caution-On-Quantitative-Easing-QE.html
Every single time the market reaches this point, I always ask myself that same question. What bothers me is that financials are blowing past almost all resistance. Both IYF and XLF are just a few percentage from the last line of resistance. If they blow through that I will reduce my position to 25% and wait for the 200dma. But like I said, I go through this same ordeal every time. This time around, I see that Ben has actually launched his helicopter, but I'm not buying it. I'm treating this the same as every other potential rally that ended up fizzling. Keep this chart in mind for perspective:
http://dshort.com/charts/bear-markets.html?four-bears
As someone mentioned earlier, the quarterly distributions for ETFs are approaching. Last time this resulted in a significant opening price gap-down.
From Proshares:
On the Ex-Date, the ETF will trade without its dividend with the first reported trade. That means the ETF’s NAV will drop by the amount of the distribution on the morning of the ex-date. An investor must be listed as a holder of record to ensure the right of a distribution payout. Currently, ProShares does not pre-announce distribution dates. Generally speaking, dates and amounts are published under the ‘Distribution’ tab on the evening prior to ex-date.
http://www.proshares.com/funds/distributions/DistributionsFaqs.html
And from Direxion:
Direxion shares may distribute net investment income earned by the funds, if any, on a quarterly basis. Distribution information will be posted on our web site. Unfortunately dividends and capital gains are not pre announced.
http://direxionshares.com/pdfs/DRX_prospectus.pdf
Does anyone have further info on the coming ex-date, and what it takes to be a holder of record.
agd21
agd21, on ETF distribution ex-div day, what is your advice? If one holds through it, one takes a tax hit, right? Is the 1st Quarter distribution going to be significant compared to the year end, though? The year end distribution only hit people hard with the ultra-short ETFs. Dividends are no problem, right? Just distributions. Are you suggesting anything other than a tax hit for holders? Are you suggesting a buying opportunity? The price isn't really lower, is it, since the NAV is adjusted along with the market price. TIA.
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