The Future?

[bryanmcn]

April 23,2009

The VIX has retreated from a historic high of over 80 and is a definite downward trend (now less than 40 again). This indicator reflects market sentiment. The higher the number the more volitile and worried traders are. Its downward momentum coupled with the recent upturn in the market seems to indicate that there could be gains in going long.
I own several energy and mining stocks among the odd high tech stock and am optimistic. Anyone else feel lucky?
Bryan

[garilou]

Hi Bryan,

Your new topic did  not receive much feedback. I do not know really why, (maybe because no one but you feels the courage to predict), but I remember saying once your nick should be BullBryan, and mine BearLou.

As a market predictor, or more precisely as a market sentiment, you have often mentioned the VIX, as you do in this topic.

So I thought about you when I read this article:
The VIX is in
Commentary: Market volatility remains high, but - curiously -- not the VIX
http://www.marketwatch.com/news/story/market-even-more-volatile-year/story.aspx?guid=%7BCC302023%2D88F5%2D4FED%2DA3EF%2D769C5177D575%7D&siteid=yhoof

where you can read:

...that index is not, strictly speaking, a measure of the stock market's past volatility. It instead reflects option traders' expectations of future volatility.
<==snip ========>
For example, the VIX hit its all-time high last October, when it soared to nearly 90. It is today in the low 30s, barely more than a third as high. And, yet, the stock market's actual volatility on a trailing basis is nearly as high today as it was then.
<==snip ========>

Why is it nevertheless so much lower? Because options traders are less concerned about the stock market today than then -- far less.
...
It adds yet more evidence that the market's impressive rise since March 9 may nevertheless be a bear-market rally
(underlined by me)

Worth reading I think.

Very far from that article that would be more in your mood I think:
Kid In A Candy Store Again
http://www.forbes.com/2009/05/05/ebay-microsoft-ge-personal-finance-financial-advisor-network-electronic-arts.html

In the practice, I too had started to think it was more then a bear-market rally, and had build up a "long term" US portfolio, adding 3 new stocks and doubling my position on one. Just in time to have Wednesday's fantastic ride: all my long positions went up (as a matter of fact, I went long on a short covered 2 days before because I thought: it's impossible, it can't keep going down like that, in this bull rally, I'm short on a stock that should move up.) I covered one day too early, but went long on the perfect day: it jumped by 14%. And the one I had doubled went up 20%!
I though at last I can go long and sleep... and today (Thursday), I sold 2 just in time to save some of my profits, one with a huge 47$ profit 
And Thurday was negative, but not one of those catastrophic days. Let's wait and see what Friday and the coming weeks will be. I hope I won't have to rebuild a short portfolio, but I do hope SSP is working hard on this one! In case...

So to answer your last question: I did not "feel" lucky, I was pretty much confident, and I just happened to be lucky. Lucky also that my other stocks kept doing well Thursday.
But we are certainly not yet ready to feel like "a kid in a candy store"!

Congratulations for SSP's portfolio for their Thursday performance!

Louise

[bryanmcn]

The TSX and the DOW seem to be pulling back from their massive losses (bottoming in March). If TA rules hold up, their are 2 options;
1) They retrace 50% upwards before starting another downward leg. That would put the TSX at 11,250 and the DOW at 9750.
2) They continue upward beyond these levels to make new highs.

Given the "bubble" created by the housing boom it would seem logical that #1 is more likely.

Bryan 

[garilou]

Hi Bryan,
I admire your courage to make predictions.
But as I always say, you are the BullBrian, and I am the BearLou.
The TSX never made it over 10714, and the DOW never made it over 8799, and the "downward leg" seems to be forming.

But at least, all stocks do not go all in the same direction at the same time.
So I have a "protective" portfolio now: a few stocks that go up if the market goes up, others that go up when the market goes down, (income trusts that do not move much but give steady huge dividends), and I always have between 1 and 3 shorts.

But it is still a market where you can buy and sleep on your buy for weeks or even days.
I used to like action, but now, with the summer I am thinking about going totally at cash or small but fixed revenues. But trading has turned into an addiction...hard to quit "cold turkey 

Some say "Get out in May, come back in September"... not a bad idea.

Louise

[markcle]

The timing indicator should change to "buy" today,anybody getting back in? SCARY MARKET! Don Vialoux (financial post ,BNN.CA,etc.) says stay out til November! Don't get back in in Sept. whatever you do-historically worst period for TSX is Aug.-Oct.(have people forgotten last year already!

[garilou]

Hi markcle,
I think that
1. we are not exactly in an historical pattern now.
2. Even if you bought ot sold the TSX as a whole (through an ETF), this would not prevent some stocks to do well and others to do bad.

There could be other good reasons to get out of the market, but I humbly disagree with this one

Louise

[bryanmcn]

The TSX is forming the right shoulder of a head and shoulders pattern. This is a VERY bearish signal.

I am out.

[garilou]

Hi Bryan,

The SSP MTI is still UP at this moment I write this.
But I also think that the rally in the bear market is over, globally.
Still I think that this will help some stocks.

Not everyone will go at cash: they will turn to other stocks.
Look at Jean Coutu in the past days but mostly today.

But why don't you buy a bearish S&P TSX ETF :
http://www.google.com/finance?q=TSE:HXD
A perfect reverse mirror of the TSX, and surprisingly still pretty cheap.
If the signal is VERY bearish, this ETF could grow almost 100%.
I guess this should be part of everyone's portfolio now.

Louise

[garilou]

Hi again Bryan,
Considering your alert, after I replied to you and talked about HXD,  I bought it too: today the TSX went down 1.24%... and HXD jumped 2.65%.
I had put my order in the night, and when the market opened it had already gone up higher then my limit price: (gees some people are fast!).

I think I remember, but I'm not sure, that you said once that you had been trading that ETF.
Did you need to day trade it?

I did not stick to the principle "Do not run after your stock", and I changed my order. Still I had a gain of  1.74%.
I guess (if the TSX gains a little bit back), I could double my position, trying to catch HXD somewhat lower. What do you think?
Although I don't need too many: each time the TSX goes down, my big dividend paying Income Trusts go higher.
I also have my shorts, but as you well know, you can't short in an RSSP.

Thanks in advance for your advice (or anyone else's, but it looks like there are not too mnay people participating to this topic) about that ETF, I am not used to that playground 

Louise

[bryanmcn]

Hi Louise
In my opinion the markets look like they have topped and are transitioning down. Its a tough time to trade. I think your right to take small profits as during trend chages its not uncommon to see "frothing" where the markets shift wildly. I may wait for a few days to get into some reverse ETF's like HXD. There are a few others that look good too;
HOD, HND, HED and HSD.
Finally we can "short" the market in our RSP's!

[garilou]

Hi Bryan,
As for taking small profits, we think the same, although it is somewhat frustrating, and the reverse is also true: I have taken small losses, just to see the next day that I could have had ... a small profit
And I  guess you were right too that it was too early to buy HXD. Luckily, I had bought only a 1/3 of the position I would have liked to take.

Thanks for the other ETF ideas, I had a short look at them: apart from.HSD, they are mostly bearish on energy, which seems to be a good ides. I had based my choice on HXD based on the DOWN MTI signal.

But my question was more precisely: how did you trade them. My feeling is that people buy them and put them right away for sale: when you said (pretty long ago) that you had been "trading" them, was it a kind of day trading, or did you keep them for a while?

[Robert]

Hi BullBrian !
Bonjour BearLou !


I'm a new member,
Read a lot of the post on this forum .....quite interesting!
I'm also praticly all out.(just kept a few penny stock to gamble with).
I agree with you guy's ,I feel that the markets are in wait & see mode (digestion of the last 3 -4months).There's no problem to step a side once in a while to review our positions.The present economy have some cathing up to do with the stock market.
I feel that it will go side way maybe down a little not to mutch.
Unemployement want to stabilyse down south.
I'm  5 years away from retirement ( i hope) so i have to play it safe.
When times are good i also feel that a portfolio should include stock like HXD wich is a good gamble.
Louise,could you recommend me a good income Trust ?
These are 2  long term stock on my watch list :
NYSE : XIN (Chinese real estate)why not ?
Nasdaq OTC : CHKDG (Natural gaz=clean energy)
Anybody's comments on these stocks are more then welcome.
No way shape or form i want to promote these stock!

Just received my first price daily buy and sell advice,
Sorry for my ortograph English is my second language.

Robert   

[garilou]

Bonjour Robert!

Et bienvenue sur ce sympathique forum!

Since you posted in an English topic, I'll reply in English too.

(Hey BearBrian, do you understand French?)

First I'll say that I am happy that someone else joins this topic: there were no too many of us here.

We are going to be a little out of topic, but not too many people care about that, (I am usually the one who does care) certainly not Bryan.

I hate to "recommend" stocks, I'll just tell you what I hold or check now.
I won't talk about the ETFs, since you've probably read our discussion on them, and Bryan has more experience then me on that subject.

Income Funds built on trustworthy firms are better then Income Funds that are simply created by groups of rich people who gather capital and start buying different things.
I lost a lot with Yellow Pages (YLO.UN), although the "damn" analysts kept rating it pretty good.
The yield was good but not enough to compensate the fall of the stock.

As I mentioned earlier I think in this topic, I hold to BPT.UN, linked to Boralex. you'll find out the yield yourself, but apart the high dividend, I also had a pretty good capital gain. One of the rare times where I accumulated by adding to my position when the price went down because the yield went up at the same time.
When I though it was starting to go south, I sold 1/2 of my position, and now it seems to have changed direction again.

When I sold 1/2 of my BPT.UN, I used the money to double my position on AW.UN, which gives a still higher dividend.
The problem with this one is the volume, or the absence of it:
The difference between ask and bid is always big, and you can have surprises: the stock will stay for hours at 13.84 and suddenly, finish at 13.90... or the reverse 
But when the market goes south, the sellers are very "stubborn", so I guess it would be easier to buy it on a day (if ever there is one) when the TSX makes a big jump up. Since AW.UN is "fed" by A & W, there is little chance that it will crash down the way YLO.UN did.

You are talking about 2 "long term stocks"... I think there are not many of them (I don't know what you mean by long term), for me, (apart for the income trusts and the fixed revenues) "long term" has become one week, two max.
From what I have read, lots of people seem to agree with me, for different reasons, (one of them being the easy and cheap online trading), there are very few "investors", and many more "traders", which I have become since the beginning of the crash.
Terribly addictive!.
But there is one I keep my eyes on for a potential long term: TD Bank..

Since you seem to invest also in USD, I have recently made a huge gain on a (Chinese too):stock:
VANCEINFO TECHNOLOGIES INC, NYSE: VIT.
But it raised more the 150% since April, so now, there is a lot of profit talking. (I did not get the 150%, I discovered it like often, by mere luck, but I was able to catch the last 20% in about 15 days, and cashed my profit the first day it went down.

I keep a constant eye on it, they used July 3rd when the markets were closed, to announce 2 new acquisitions, and the markets do not always react well right away to acquisitions. But lots of cash, and zero debt.
The "After Hours" trades on Thursday were 1.12% up, and I think it is still cheap.
I don't know if the 52 weeks High (15.50) will constitute a resistance: I doubt it, but I won't buy it again until it shows that the correction is over.

As for the 2 stocks you were mentioning: Xinyuan did pretty well but now it seems too quiet for my taste, close to a strong support, but with a few hard resistances not too far up. On an intermediate term, it could take 1 or 2$  but before that, it could also loose the same. The real estate crisis is not limited to the US!

As for the Nasdaq OTC:CHKDG, I wonder if you made a typo, I could not find it anywhere.

But although I also keep an OTC Penny stock, I usually do not like OTC stocks, and would certainly not recommend the one I own!
For a while I had a huge profit, but I became greedy and now I am only in loss.
So hard to sell! I kept trying, and I finally sold to market, what increased my loss.
I keep the balance as a tiny proportion of my US portfolio, and this is for the LONG LONG term,  where I am prepared to loose every "penny" I have put in it.As you said, it's for the fun of gambling, but I would not keep 2 or 3 of them!

You are right to try to play safe with the capital saved for your retirement,
I do the same: my RRSP is extremely conservative, and I "play" only with my margin US account that allows my to short both US and CND stocks.

Do you also short sometimes? I really wish SSP will build a short portfolio: they were too busy with their MTI, and other things too I guess.
Stocks to short were easier to find last July-August! Since I am the "BearLou", this is really for me the fun part, but now there are so many undervalued stocks, it's harder to find.
One day I guess I'll write a long post on my "shorting tricks", because my "good hits" percentage is much higher with shorts then longs, even in bull markets

Finally, PLEASE, do not think I am "recommending" any buys.
I leave that to SSP, they are usually pretty good.
I just told you what I am looking to these times.
Like everyone, I sometimes make good hits, and other times, I goof miserably.
But if I am right 6 times out of 10, I consider I'm not too bad, as long as I can limit the losses on the 4 bad decisions.

Sorry for that long post: my posts are rarely short, but I also do a lot of research before and while I write them.

Louise (BearLou)

[bryanmcn]

I will buy and hold for at least a few days till the predicted trend is proven or not. If the trend prediction is proven I may hold for weeks or months till a reversal indicator shows up.

[ge]

Hi

I think we have to be very carefull about the etf.

Too many people are making sucker bets with these products

Warning: Leveraged and Inverse ETFs Kill Portfolios

Here is a good article about such ETFs:

http://news.morningstar.com/articlenet/article.aspx?id=271892http://