SSP during a drawdown

[Super Stock Picker]

Hello,

I can't figure out why the SSP algorithm would indicate a sell for FSY.

Regarding your question, this sell has been triggered because FSY has lost its analyst recommendation in our database. We do not give a lot of credit to analysts opinions but we use this recommendation as a first level filter to remove too small companies and to avoid those that are poorly considered by analysts.

That's a consequence of being systematic. The trend is obviously still there, especially given the current market conditions. But as one of our criteria is not meet anymore, we sell the stock.

[garilou]

Hello SSP,

I do not know if we may ask from where you feed your analysts ratings database.

I searched a lot: all I could find for FSY was on Globe investor:
Brokers ratings this stock: 0 (so no rating)
5 stars rating:  * * * * *
And (Sept.18) on my trading web site:

Forsys Metals Started At Buy, C$6.75 By Laurentian   

All other sites are paying...

Thanks,

Louise

[bryanmcn]

Aaaaah.
Veeeery interesting ...
Thank you SSP. I have sold FSY.
Bryan

[Super Stock Picker]

I do not know if we may ask from where you feed your analysts ratings database.

Hello,

Don't know a better free one than GlobeInvestor. It should be the same data as what you can find on zacks.com as well.

[bryanmcn]

FSY keeps running. Remind me not to listen to analysts!

[Super Stock Picker]

FSY keeps running. Remind me not to listen to analysts!

Definitively right not to listen to their opinion.

We do take into consideration their coverage as it filters very small or very bad companies.

Don't ask why they stop their coverage of FSY...

[bryanmcn]

As painful as this is, it is time for another update. I post these stats for reference purposes to convey to future SSP holders that as great the returns are things are good, the SSP can experience sever drawdowns. In my opinion it is unwise to "blindly" follow any stock picking strategy regardless of its amazing returns. PAst results are not a guarantee of future returns.

Sept 27th
The V1 has a one year return of -50%, YTD -60%, 6 months -46% and 3 month -63%. Yes those are all negative and no the V1 is not the worst performing portfolio.

The V3, 4 and 5 are presently in cash.

Is it too late to start a shorting portfolio?

[bryanmcn]

Does anyone out there follow the VIX?
Symbol is $VIX and it is a "fear" measure. Traders will often use it as a contrarian indicator. When it is at its highest it usually indicates that markets will soon be rebounding from lows.
In the past decade, the VIX traded above 40 four times: During the Russian debt crises in 1998, after 9/11, during the market downturn of 2002 and Last week when it hit 42.

[garilou]

This information about the $VIX is very interesting.
Yes I looked at it once in a while since I discovered it while doing research on volatility.

But I did not know that it was used as an indicator.

During the past week, it seems to have found a resistance around 36 though.

But a predictor? If you look at a compared chart between the $VIX et the $DJI, you just find that they are a reversed mirror from each other...What does this predict?


Yesterday I found an article about 3 stocks that can be used as predictors.

They would be:
1. Cummins (CMI), (would be an indicator of growth rates)
2. Best Buy (BBY) (indicator of consumer mood)
3. Caterpillar (CAT) (indicator of worldwide growth)

Really, it seems that (like you when you said your crystal ball was broken), every one seems to be looking for a crystal ball that would predict the future...

That is why so many people have developed oscillators.
On that I like is that Aroon from StockCharts:
http://stockcharts.com/h-sc/ui?s=$VIX&p=D&b=5&g=0&id=p32782019790

Who would have predicted what happened to RIM yesterday?
A few months ago I posted on another forum that I thought RIM would be soon down to &90.00... (admittedly with the help of stockcharts.com P&F predictions) and the person thought I was crazy (did not use that word), it was impossible.
Last week it was pretty close to it, but I would never have expected a one day drop like what happened yesterday.
If I had not shorted it, it was because it was to expensive in that time, and I did not have enough margin.
But if I had... maybe I would have taken my profit last week when it showed signs of changing trend, and missed that yesterday's drop.

The truth is that there is NO crystal ball!
The closest to it, I think, are the stockcharts.com P&F chart, where your can "back test"
At the beginning of June (when the VIX was at 20.24, they already showed it bullish with a 28.6 target.
Last week they sent RIM to 147 on the long term, but on the short term to 81.95...
Maybe RIM could be a good "bottom fishing" prospect... But even they sometime miss their predictions.

Now... at VIX 34.74... they send it (long term) to....88.5!!!

Yes, SSP hurry up with your short portfolio 

Louise

[bryanmcn]

Will those three you found stocks predict market moves?

Since the $VIX and the $DJI are mirror images, when the $VIX reaches its highs it predicts that the Dow has reached its lows.

The question is ... Has $VIX really reached its highs?

In my opinion ... yes.... for a while.

[garilou]

The question is ... Has $VIX really reached its highs?

Yes, that is the question .

As I said in my previous post, it seems to have met a resistance.

you write:

Will those three you found stocks predict market moves?   

I did not find them, the article was from Mark Manning.

But when we look at them compared to the $VIX

http://finance.yahoo.com/echarts?s=%5EVIX#chart4:symbol=^vix;range=3m;compare=cat+cmi+bby;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on

1. CMI (growth rate indicator) seems to have very weak life signs, and in general, investor bet on growth.


2.CAT (worldwide growth) gives also no sign of recovery...

3.BBY (consumer mood), is the only one to show signs of recovery, but in my opinion, it is not necessarily predicting long term market growth: the "bailout" will just allows banks to be able to provide more credit: if you listened to the presidential debate Friday, it seems that the "American Dream" lies in the ability to buy a new CD player!

Because Americans (and Canadians to a lesser extend) buy so much on credit, (and that "bailout" is there only to protect this ability to buy), they might soon be unable to buy anymore,
(VISA might also be a good predictor of consumer mood: and it does not seem to have finished it's run down.)
http://finance.yahoo.com/echarts?s=%5EVIX#chart1:symbol=^vix;range=3m;compare=v;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on

In "long and short," I am way not as optimistic as you, except on a pretty short term basis, but certainly, in the short term, (this has been said over and over), in the moment, the stocks to buy are in consumer goods, and for the moment, as far as betting on stocks, I' ld still be on the "short" side.

Louise

[Super Stock Picker]

Hi,

I wanted to share with you today's market analysis done by our partner, JITNEYTRADE, as the main topic is the VIX:

Charting the VIX...

The configuration of the VIX volatility indicator is showing the S&P just traversed into the twilight zone. We are now at another magnitude. The other markets in the world are all in the same boat. In our Daily Report of 18Sep08 we were mentioning that the recent highs in the VIX are the last chance to contain this correction. Not only did we pass through these levels quite easily but we also went past the 1998 & 2002 levels.

The VIX is now in totally uncharted territory when it comes to fear monitoring. We are at levels that par non quantifiable or not comparable to anything in the past. At this stage it is close to impossible to gauge where and when we will see a low in this market. We can only enter we will see a formation of a strong base and this can take time. It is almost futile to talk in terms of support areas or to even try to define them, the momentum gathered to the downside by this market could quickly put any of these levels in play very quickly. We shall wait for the markets to show us the way. For now, the only refuge is GOLD, the physical kind not the stocks of course. All paper assets are being affected by the present conditions.

See graph in attached picture

[garilou]

Hi,

I heard something similar last Friday from an analyst, that the only refuges were gold (and silver.)

Now I don't know how to buy those, unless I' ld start commodities trading.

There could be another one. We talked about those somewhere else.

Since a few weeks I was following 2 Ishare "stocks", in order to find something that could be both secure for an RRSP and bring a little more then what I had.
One was:
XCB (CDN Corporate Bond Index Fund),
the other one was
XGB (iShares CDN Government Bond Index Fund).
Then last week, I thought if the markets do not trust the big corporations anymore, they won't trust their Bonds either.
I decided to go for the XGB. (http://ca.ishares.com/product_info/fund_overview.do?ticker=XGB )

I guess I made the right choice:
XCB took a bad drop:
http://www.stockscores.com/quickreport.asp?ticker=t.XCB
while XGN started to move up quite drastically:
http://www.stockscores.com/quickreport.asp?ticker=T.XGB

Well the charts look more spectacular then they are really, because those have not big $ difference between their highs and lows.

When I jumped in I was a little bit afraid, because they had already gone up 7% in the 2 previous days, but I got them last Thursday XGB at 19.90 (was really lucky) and I am now up quite a few % up.
The dividend is 0.8814, (the yield goes somewhat down as the shares goes up, but it will probably stay in the range between 3.5 and 3.8%), but I guess it's pretty safe refuge too: it looks like the market still trust Canadian government bonds.

I am just mad at me that I did not buy more, I was keeping some cash for when I' ld seriously go with SSP... but I guess it's not the right time yet.

As your post showed, the VIX has broken all its resistances, so there is no way to guess how long and how low this bear market will go.

So it might not be too late.

Louise

[bryanmcn]

I read once about a trader that, during the '87 crash, went down to his bank and physically removed all the gold bullion he had in his safety deposit box. It was so heavy he could barely carry it in his suitcase. He was afraid that his bank was going to fail and might close its doors leaving him without access to his riches. He commented on how crazy his wife and family thought he was when he told them to prepare. He says that few people knew how close the world came to a complete banking collapse.

When fear is at its highest - so is opportunity but ... is the worst yet to come?
 

[DCA]

I do not know about converting my assets into gold.  I have now experience this month (and we are not at the half way point yet) a drop equal to two times my last year's tax return.

I am almost scared to look today and suspect that the best thing to do is to convert my remaining assets into single malts and vintage ports.

These are liquid assets that will retain their value.

Chicken Little was right.  The sky has fallen.  Now we just have to collectively deciede whether to jack the ceiling back up or break out the shovels.

D