The Weekly Predictor Updated November 20, 2009

Buyers and Sellers ended their fight for control of the market by declaring a draw last week.  The S&P 500 closed down .19% at 1091.38.  Last week, I said that double top at 1100 was what worried me most.  Getting past resistance at 1100 looks to be difficult.

 

A stronger Dollar hurt commodities and took the wind out of stock prices in the week just past.

         

The Weekly Predictor remains positive while the Summation Index painting red again indicating a change in trend from UP to DOWN.   

The S&P 500 Bullish Percent Index closed at 77.00% up ever so slightly from 76.60% last week.     

It is going to take a lot of Holiday Cheer to close the year above 1100 I’m afraid.

Happy Thanksgiving!

Dan Clemons author Manage Your Own Money

This video shows The Predictor trading JNJ:

http://www.youtube.com/watch?v=cNk7Et2G1TM

This Video discusses 10 things every investor should know:

http://www.youtube.com/watch?v=Omg9ymZAJ6k

S&P 500 Predictor and Summation Buy and Sell History

Special note:  Summation Buy and Sell signals are not valid when the market is Trending.

Predictor Sell on October 1, 2009 - Predictor and Summation Buy on October 8, 2009

Summation Buy on July 9, 2009 - Summation Sell September 22, 2009

Predictor Buy on March 11, 2009 – Predictor Sell on June 1, 2009

Predictor Buy on November 24, 2008 – Position Closed by Summation Sell on January 13, 2009

Predictor Buy on July 21, 2008 – Position Closed by Summation Sell on September 9, 2008

Predictor Buy March 17, 2008 – Predictor Sell on May 20, 2008

Bonding With Bonds November 20, 2009

I was active in the bond market this week.  Both of my purchases were CD’s as the yield spreads between government backed securities and corporates continued to fall to 100 basis points or less.  Bond investors looked for a government guarantee to provide some financial comfort to the end of the year.  Bond investors were even willing to accept a negative rate of return to get that government guarantee.  Rather than treasuries, I prefer to look for FDIC Insured CDs in the secondary market.  Found two on the Bond Desk to brag about; the best yielded 4.587% maturing on July 7, 2010.  A second CD had a 2.6% yield to the January 2010 Call or 4.46% yield to maturity in January 2011.

Interest rates on the 10-year Treasury Note closed the week at 3.36% down from 3.45% last week.

 

The Bond Desk does favor small investors.  I turned down some good CD yields because of size $1,000, $2,000, or $3,000.  One of the negatives to the Bond Desk is that it’s hard for big players to find much available in that 100 bonds and up category.  Once in a while I see 1,000 bonds but that is rare.  Mostly it’s 75 bonds of this or 35 bonds of that or 5 pieces or 10 pieces.  The majority is 25 bonds or less.  So you can clearly see that small investors fare best on the Bond Desk.

I would like to share one of my favorite bond sites with you: http://www.investinginbonds.com/

I won’t invest in a bonds listed over the weekend on the Bond Desk.  Sellers lower yields hoping to pick up a bid over the weekend.  That spells less yield to you and a higher bond price for the seller.  The second tip is the best time of day to look for bonds and that is between 1 pm and 3 pm Eastern. 

How much money to allocate to individual bonds and how much money to allocate to bonds maturing in years 1, 2, 3, and 4 can be found in my book Manage Your Own Money.  

My current bond trading strategy looks for Investment Grade Corporate bonds and CDs maturing in 18-months or less.  The reason to stay short 18-months or less is because inflation is coming to a fuel pump near you.  I look for bonds that are mispriced giving me a higher yield to maturity than another bond of the same issuer maturing within a few weeks of each other.  Don’t forget that short maturity’s reduce risk more than any other measure.  It is always smart to avoid companies on Credit Watch.  Staying well diversified, limiting the number of bonds invested in any one company, and checking with Moody’s before making a purchase will add confidence to your trade.  Since bonds are backed by shareholder equity, it is smart to require a share price of $10 or more!  Here is a short video showing bonds available on the Bond Desk:

http://www.youtube.com/watch?v=rEj68ZZGwTw

The most bond friendly broker dealer is named in my book Manage Your Own Money.  All royalties are used to care for sick and injured animals from the wild.  Who will care for them if we don’t?      

Happy Thanksgiving to you!

Dan Clemons author Manage Your Own Money

Authors Note: November 4, 2009

All royalties from the sale of Manage Your Own Money are donated to charities that provide care for sick and injured animals from the wild both sea and land.  Our last quarterly donation went to the Rogue Valley Humane Society here:  http://roguevalleyhumanesociety.org/.  Thank you for helping to support this very worthy cause.

Daniel J. Clemons author Manage Your Own Money

To watch a short video of Dan Clemons describing how to manage a 401k plan click here:

http://www.youtube.com/watch?v=UfSQY-JlEWs

To read what others are saying about the book, click here:

http://www.amazon.com/gp/reader/1439202117/ref=sib_dp_ptu#reader-link

To put The Predictor on your desktop click here:

http://www.amazon.com/Manage-Your-Own-Money-professional/dp/1439202117/ref=sr_11_1?ie=UTF8&qid=1221072523&sr=11-1

Want an Exit Strategy to avoid corrections and bear markets?  The Predictor guides the investor in and out of positions with precision.

Post Your General Questions and Comments about Money

Everything that is super important for you to know about money is included in my book, which you will find on sale for $26.60 right now at Amazon.com a 21% discount!  

With very warm wishes,    

Dan Clemons author Manage Your Own Money

Important Disclaimer

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. Prices, values, or income from any securities or investments mentioned on my blog may not be in the best interests of the investor and the investor may get back less than the amount invested. Where an investment is described as being likely to yield income, please note that the amount of income that the investor will receive from such an investment may fluctuate. Where an investment or security is denominated in a different currency to the investor’s currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor. The information contained on these pages does not constitute advice on the tax consequences of making any particular investment decision. This material is not intended for any specific investor and does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation of particular securities, financial instruments or strategies to you. Before acting on any recommendation on any material presented, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. 

Chart of The Week – Updated November 20, 2009

Take a look at these two funds on the chart below.  It looks like one fund is making money while the other one is losing money.  It also looks like if you owned both funds at the same time, you would make no money at all.  They seem to look like they move just the opposite of each other.  How could Wall Street get two funds that perform exactly the opposite of each other?

 

Both funds are the S&P 500.  One is a long position, which is the solid line.  The other is shown in candlesticks and is a short position.  Mutual funds are not easy to manage because they have early redemption fees and then there are taxes to consider.  So, how do you protect a portfolio when the market trend is down?  You can purchase SH an ETF that holds a short position in the S&P 500.  At sell signals, rather than sell something, a portfolio can be shifted into neutral by simply adding SH.  Results will vary depending on the size of the portfolio and the amount of the short and how well the investments in the portfolio correlate with the S&P 500.  Please read the Disclaimer above before investing in anything you read about on this blog.  I would like to thank my good friend Chip Anderson at Stockcharts.com for the use of his beautiful charts in my book and here on my blog.