Tim Reazor
Chief Investment Strategist
NorAm Asset Management
It’s easy to be right in hindsight. I know many a pundit or publication that brags after that fact. They’ll tell you or write about when you should have bought or sold a stock. They’ll tell you everything you did wrong – inferring of course that everything they did was in fact spot on. These folks I’m talking about come off as impervious to mistakes. They’ll give up their intellectual prowess over you if they ever would be honest. We all know people like this don’t we. We think they are superior because they spout off in the press, on Twitter and newsletters… present company excluded J So what’s my point?
I believe we can achieve great things together.
It’s ok to be scared during markets like the one we’re in. It’s scary to lose your gains from 2013. It’s even scarier to execute the strategy that worked so well in 2013 only to have it fail miserably in 2014 and have no clue how to fix your money losing ways. The pundits and press I hear and read have all the answers – but yet they don’t give you any practical advice. They talk around the issues – they don’t talk to you.
Now I’ve thrown a thick blanket over a wide swath of media – let me be clear. There are some great folks out there doing incredible things. I know many of them personally and I love them. In the same breath we’re all aware of the pointless radio shows, mindless blogs and blowhard press that infests the investment education waters and makes them murky to wade through.
Let the healing begin. Investing is 90% psychological. The investing crowns don’t go to the folks with the best educations. Successful investing starts with the belief that you don’t know the outcome. You need common sense and to believe in yourself. I’ve found that the only thing and investor can do is align as many facts as possible in a row and then put yourself in a position to make money.
Whether your facts and thesis work out or don’t work out, you need to rely on rules.
If you’ve been dinged in the markets this year let’s review what may have gone wrong – and fix it now so it doesn’t happen again using rules. Here are some bullet point situations and fixes.
•My losses are crippling – I’m losing too much money.
•Set a hard stop at 5% from where you’ve entered your stock or ETF
•If you’re giving up all or a good portion of your gains try selling into strength. If you’re up 12%-18% in this market take all but a 1/3 of your trade off. This will help you harvest profits and still participate if the stock goes higher. Sell the last third on any gap down or break of the 50-day simple moving average.
•I’m picking the wrong stocks.
•You’re not spotting the rotation in stocks quick enough. It doesn’t happen overnight. You have to be aware of sectors and subgroups. We rolled clients out of tech names on March 24th and 25th and into energy names on April 1st and 2nd. Why? Because at NorAm, we spotted the rotation taking place. You’ll want to invest the top 50 subgroups. What you want to look for is rotation. If you spot groups moving higher or lower every week you’ll know where the institutional money is flowing. I do this kind of grunt work every Sunday morning. I count the rotation by group each and every week. Doing this drill will always keep you ahead of the curve.
•If you buy three stocks in a row and all three purchases fail you need to stop trading for two weeks. You need a break. Don’t lose confidence – this is a marathon not a race. You just need to assess the situation. Make sure you’re in the right groups and right stocks.
•What are the right stocks? They are stocks that are in the upper 2% of the market. That means that they are the best stocks out there. Often times they are at or near their 52-week or all time highs. That’s a good thing. If you screen for stocks with the best earnings, sales, revenue, return on equity and institutional support and you buy them at or near their prior highs – your results should improve. Why? Because these stocks are only strong because the people that control the markets are bidding them up – the institutional investors want these shares – and if they want shares in the best stocks then so do you. Stop looking for value or beaten down merchandise. You don’t go to the car dealer and say I’ll take the beaten down clunker leaking oil please…. You buy the best car you can afford. Stop buying clunkers and you’re results will improve.
•Know the trend. If you look at a chart of the Nasdaq or S&P and the trend of prices is heading lower the tides are against you. Wait until the markets clear prior resistance. Why? Seventy-Five percent of stocks are going to follow the general trend of the market. If you’re trying to go long in a downtrend you have a 75% chance of being wrong. Why not wait until the odds are in your favor.
Hopefully this is practical guidance you can use to improve your results. You’re not alone in this investing world. I’ve made every mistake you have and some you haven’t even thought of yet. All of my personal investing rules have been born out of my mistakes. I’m hoping that if I share my rules your mistakes will be minimized.
If you’d like to talk about rule based investing or if you would like to join us for our trading / investing open house please email me – Tim.Reazor@NorAmAsset.com
Best Regards,
Tim
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
I’d describe my nirvana in the stock market as follows – making the most amount of money with the least amount of risk. I’m betting you’d describe this as your nirvana in 2014. What about 2013? How did you trade and invest in 2013. I’ve met a lot of folks this year who have lost most of 2013’s gains in 2014. These investors placed ill-timed bets on stocks that were about to fall out of favor. I’ve met investors who have traded twice their normal position size in order make back lost gains… only to lose twice as much. I’ve also met the investor who places bets and loses on what should happen in market based on “their view” of the economy. Does any of this describe you?
There are ways to combat the above. I’m not lazy about research, stocks or the markets… I am lazy in this regard – I want to make the easy/boring morning. I learned a long time ago that no one standing at a cash register cares how hard I had to stress over a trade when making a purchase. That person takes my money whether I made it in a low-stress manner or had beads of sweat running down my chin for the entire length of the trade. So, how do you learn how to make the “easy” money – keeping in mind that there isn’t anything easy about the markets J
Here is how I research and handle my investments. This level of preparation I believe is why we are successful here at Noram Asset Management. We use the below preparation to invest in stocks, ETFs and to generate weekly income for clients.
•Learn to spot sector and subgroup rotation. This is grunt work, but it pays off. We were able to place clients in energy stocks at the end of March and beginning of April because we was able to spot the sector and subgroup rotation by institutional investors.
•Only invest in the top 2% of the market. The stocks you buy should beat 98% of tradable stocks in areas such as earnings growth, sales growth, revenue growth, return on equity and institutional support. All of these areas should also be accelerating.
•Increase your market situational Awareness. If most stocks are going down the chances or your success in the market are slim. In a downtrend you have a 75% chance of having every stock you buy or own going down. Wait to invest until the trend turns higher.
•Once you find a stock to buy write you game plan down in your trade journal. Don’t have a trade journal? Get one. Write down the proper buy point and buy range. Write down your stop loss price as well as your price targets. Also write down what would keep you in the stock beyond your targets and how you’d then get out. More simply put – have sell rules!!
•Stick to your plan. Be accountable to yourself and execute your well thought out plan. To be successful you’ll need to stop flying by the seat of your pants.
•Debrief your investment when it is over. I learn a ton from my mistakes. If I write down how I mishandled a situation I’m less prone to repeat the mistake.
As for the markets on Wednesday… The market is on shaky ground. The Nasdaq, which once led the markets higher, now is leading us lower. If the ADP employment report is soft coupled with a soft GDP report then look for this downturn to pick up steam. If you add three poorly received quarterly reports from the likes of Twitter, Panera Bread and EBAY then you can make a pretty strong bear case for May and beyond.
Remember, the easiest way to be bearish and defensive is through the use of bonds. The easiest way to invest in bonds is to use the bond ETF TLT.
If you have any questions or would like to join us for our trading / investing open house please email me – Tim.Reazor@NorAmAsset.com
Best Regards,
Tim
Economic Reports Today:
ADP Employment Report
8:15 AM ET
GPD
8:30 AM ET
Employment Cost Index
8:30 AM ET
Chicago PMI
9:45 AM ET
Petroleum Status Report
10:30 ET
FOMC Meeting Announcement
2:00 PM ET
Farm Prices Report
3:00 PM ET
Notable Earnings Reports Today:
Actavis (ACT)
Iconix Brand Group ( ICON)
Whiting Petroleum (WLL)
Yelp (YELP)
Tesoro (TSO)
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
Tim Reazor
Chief Investment Strategist
NorAm Asset Management
Oh the drama… everyone starts out their blogs, newsletters, videos and television shows with “this is the most important thing ever…” to get you to read, listen, etc. Most of the time it’s useless drama that sucks you in and doesn’t make or save you money.
This week is different my friends.
This week there are 16 substantial economic reports that all have the potential to propel the markets higher, or drive them lower. On Monday morning pending home sales are reported at 10:00 am Eastern. At 10:30 am the Dallas Fed manufacturing survey is released.
Pay attention to Tuesday. This is when the fun really starts. The FOMC meeting begins; S&P Case Shiller is reported as well as our consumer confidence. The housing reports loom large this week. The market has been planning on 3% GDP. Housing in the United States is a large part of our GDP. If these numbers disappoint it will be a hard road to a 3% growth rate. If we can’t make a 3% growth rate then the markets most likely will correct further.
The GDP mystery won’t last for long. GDP is reported on Wednesday morning at 8:30 am. Again if this number is below 3% there will be fireworks in the markets. Both equities and bonds will be affected. Add in the employment cost index report, Chicago PMI and the FOMC meeting results and I think Wednesday sets the tone for the rest of the quarter and the end of summer.
Thursday doesn’t relent – motor vehicle sales are released, jobless claims are reported, as well as personal income. The latter will have a huge affect on the retail sector. To cap a busy Thursday, Fed Chair Janet Yellen speaks, PMI for manufacturing is released as well as construction spending.
Had enough? Friday is the game. Our employment situation is reported on. The implications are self-explanatory.
How should you position yourself this week? Be defensive and don’t guess. Remember that the obvious trade is often times the wrong one. The markets aren’t always rational. As you know, the markets often react in a manner that doesn’t makes sense in the face of the reports that are released.
The easiest way to be bearish and defensive is through the use of bonds. The easiest way to invest in bonds is to use the bond ETF TLT.
If you want my extended thoughts on thoughts on the markets please listen to my radio show from this past Saturday – http://www.thewallstreetshuffle.com/
If you have any questions or would like to join us for our trading / investing open house please email me – Tim.Reazor@NorAmAsset.com
Best Regards,
Tim
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
Tim Reazor
Chief Investment Strategist
NorAm Asset Management
It’s tough holding stocks though earnings. And it’s downright reckless to establish new positions just before earnings. There is however a strategy we like to employ right after earnings. It’s called the credit spread.
We only employ this strategy after a strong earnings report and a big run up in the price that holds into the late morning / early afternoon. That of course is exactly what Apple did today.
After the 8%+ run-up in price this morning, the initial sell off, support and the run up in price I went to work to find a trade. After some research I discovered that Apple’s expected move into this Friday’s close was $6.00 dollars. The stock was trading around $567 at the time of my research. That means that the market makers expect apple to go down to $561 or up to $573. Since I’m bullish in Apple after the report and it didn’t sell off at the open, I went hunting for a put-credit spread.
The most advantageous spread I could find was the 560/555 put spread. By advantageous I’m referencing expected move, stocks direction, standard deviation distribution, and time and credit. Notice I said credit last.
Always shop your stock first, then the credit. Do not look for the options with the highest premiums or spreads. You’re looking for a combination of the least amount of risk with the most amount of reward. Armed with the spread, I wanted my partner at Noram Asset Management, Danny Stewart, to confirm what I saw and execute the trade for the firm’s clients.
Danny and I were able to obtain a .35-cent credit for this trade. That means we were paid .35 cents per contract. Since options trade in contracts that represent 100-share blocks this means a spread on 10 contracts, for example, that we took in $350 dollars as a credit. If you sell 100 contracts, you would bring in $3,500. We have already booked the credit and these weekly options expire tomorrow, so we only have to be right for a day!
Still not sold? Well, if we do this small style trade repeatedly on two stocks every week the money adds up fairly quickly. For me this trade is like shampooing… I want to rinse and repeat each week.
There is risk with this trade. Apple could close tomorrow below $560. We’d then lose the credit we took in plus the difference in the spread. If Apple were to fall tomorrow we’ll exit the trade for a small gain or scratch trade instead of absorbing a loss.
So what’s the upside and why accept .35 cents as a credit. The expected move was $6.00 at the start of the trade. At the close of trade Apple was trading at $667.77. Tomorrow Apple will have to lose $6.78 for this trade to fail. Here’s what you need to know. Apple at these levels has a 85.82% chance of closing above $560 tomorrow. Plus, I’m only holding this trade for a potential 8 hours max. The full trading day tomorrow and time left in the trading day when we executed. I like my odds of success. Plus, as mentioned above we’ll close the trade if there is peril in the markets tomorrow.
Always keep in mind – this is an income trade. Every week we generate income for clients in the most conservative manner. This isn’t a trade to swing for the fences. It’s a compliment to our directional investing.
I hope this explanation was helpful. Please do let me know.
If you have any questions or if you’d like to learn how we could assist you with this strategy please email me – Tim.Reazor@NorAmAsset.com
Best Regards,
Tim
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase
of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
Tim Reazor
Chief Investment Strategist
NorAm Asset Management
If you’re bullish on the markets you’re feeling really nice and cozy. That’s just what the markets want you to think. They’re like the sweet smelling Venus flytrap…. the common housefly doesn’t stand a chance again this alluring temptress. So what does this have to do with you? Well, I think the market is laying down a trap… it’s sucking you in, making you think things are nice and rosy, but this could in fact be a trap.
I’m thinking this way because a bearish technical pattern has set up on the S&P 500 called a head and shoulders. As you can see on the chart below – the pattern is formed by three peaks – one on the left which is the first shoulder, a middle spike which is the head and a right peak or shoulder which has now formed after Tuesday’s close of trade.
When these patterns appear more often then not the right peak or shoulder will rise up to the levels of the first two peaks – resistance – and reverse lower. This is why this is a bearish formation.
The S&Ps could power through the previous two highs and we’ll be off and running higher again. The reason why I am concerned that there is another leg down coming is because to two factors. Bonds rallied today. Bonds and markets usually don’t rally together – when they do eventually bonds win – they will move higher and stocks will push lower.
The other factor is volume or the lack of volume to the upside. Then moves lower have been on tremendous volume. While the moves higher have been on low volume. This signals a lack of conviction by institutional investors.
One more note. We still have seven economic reports to get through this week. Each of these alone can move the markets.
I’m not bearish, I’m not bullish, I’m nimble in the face of facts.
I hope that helps. If you have any questions or want to talk strategy please email me – Tim.Reazor@NorAmAsset.com
If you’d like to take advantage of our trading and investing open house please let me know. For the next three week , by appointment, readers of my newsletter and listeners to the Wall Street Shuffle Radio Show are invited to visit our offices and trade and invest alongside the team. I’ll be doing credit spreads most every week. If you’d like to learn simply drop me a line.
Best Regards,
Tim
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
Tim Reazor
Chief Investment Strategist
NorAm Asset Management
Success in the markets only comes with well-defined risk control procedures and knowing where potential traps might be. This market could be setting you up for a mighty big fall. Netflix has reported a well-received quarter and this morning’s Leading Indicators Report didn’t trip us up. You still have to be very cautious.
There are nine economic reports being released in the next four days that will move the markets up or down. Add in earnings reports from the likes of Apple, Facebook, Amazon and Under Armor and this week promises less certainty and more volatility.
The trap has been set…. You’ve been lulled….
Until we clear the $1,867-price level on the S&P 500 and finally clear the $3,570 – $3,600 price range on the Nasdaq the market is prone to violent selloffs. The market will lull you into a false sense of security. It will rise on low volume to the key levels I just mentioned and sell off violently and wipe out any newfound gains.
Can you see this coming? You bet; watch how bonds act everyday this week. They will signal whether this move is real or not. If bonds break decidedly lower then the move higher in stocks is real. If bonds hang around old highs or rally then beware… it’s a trap!
So how do you play this… stay nimble and look for the strongest markets. Right now one of the best markets is found in oil. Crude is setting up beautifully around the $104-price level. If crude continues its current pattern look for crude to shoot up to $106 and then $111. The easiest way to participate in this move is using an ETF based on crude. USO is a fine choice. Look for USO to move up ton $39-$42 depending upon how steep the climb in crude becomes.
If you’d like to hear my expanded thoughts on the markets, stocks and commodities you can listen to my radio show or watch my weekly video. Here are the links –
http://www.thewallstreetshuffle.com/
http://noramassetmanagement.com/wp-content/uploads/2014/04/Meet-Now-4-18-14-9.36-PM.mp4
If you have any questions or would like help setting up a successful investing strategy please email me – Tim.Reazor@NorAmAsset.com
Best Regards,
Tim
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
Tim Reazor
Chief Investment Strategist
NorAm Asset Management
I believe this week will define the quarter for the markets this week – maybe even though summer. What is happening this week? Earnings. Almost every beaten down tech stock and biotech is reporting this week. If earnings are strong sentiment may shift and fuel the next move higher in the markets. On the flip side if earnings are flat or worse then this most likely will be the impetus markets need to dive lower.
These are some of the companies reporting this week. NFLX, GILD, ISRG, SWKS, AAPL, BIIB, FB, TQNT, AMZN, BIDU, LVS, SBUX and UA.
In addition to influential earnings the following economic reports will certainly sway institutional investors. This week’s reports include Leading Indicators on Monday, Existing Home Sales on Tuesday, PMI Manufacturing, New Home Sales and Petroleum Status on Wednesday, Durable Goods and Jobless Claims on Thursday and PMI Services and Consumer Sentiment on Friday. Got all of that?!
So after all the confusion I’ve presented above I have a plan that should be of service to you this market week. If you click the link below and watch the video you’ll know exactly how I’m approaching the market this week. You’ll know my levels for the S&P, Nasdaq, Gold, Bonds and Oil. You’ll also see my targets for CLR, SLB, USO, TLT and URI. The video certainly isn’t advice; it’s information – that’s all. Here’s the link – http://noramassetmanagement.com/wp-content/uploads/2014/04/Meet-Now-4-18-14-9.36-PM.mp4
One last note about the video – we’re hosting a trading and investing open house. All of the details are included in the video to participate.
If you missed the radio show this week, I covered the proper time to sell, levels to the upside and downside in the S&P and Nasdaq. I also talked about credit spreads and potential leading stocks. You can download the show for on the go listening…. Here’s he link – http://www.thewallstreetshuffle.com/
If you have any questions or simply want us to help you develop a winning strategy for this market please email me at Tim.Reazor@NorAmAsset.com
I talk stocks and markets everyday on twitter – if you’d like to follow me here my handle @TJReazor
I hope you have a fantastic week!
Best Regards,
Tim
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
Tim Reazor
Chief Investment Strategist
NorAm Asset Management
With the Dow and S&P bouncing off their respective 10-day simple moving averages and the markets being up for three straight days I’m inclined to say yes. But wait there’s more…
Earnings season is just getting underway and could derail any potential move higher. So how do you keep your sanity? Wait for the signals that it’s the time to move back into growth stocks. Here are the signals…
1.Have we cleared resistance are we making new highs?
2.Does the move higher coincide with higher institutional quality volume
3.Are leading stocks leading the charge – not laggards – if laggards or beaten down stocks lead us higher that would be a junk rally. We need quality stocks to lead – such as Continental Resources or Diamondback Energy (we’re long both names)
4.Bonds have to stop moving higher – it TLT is advancing the move most likely won’t last. We only want to invest when all the signals are in our favor.
In the meantime hone your watch-list. As soon as I get my signal I’ll be cautiously adding to our portfolio for clients. If we do get our signal next week expect some chop and some disbelief. Headlines sell news and markets don’t always react in the manner you think they would or should.
Remain nimble and without opinion – it’s the best way to spot the next opportunity.
Please keep an eye out in your email for my weekend update video. The video is a great way for clients to know what we’re thinking here in the shop. The update is also a great way for the busy investor to stay in tune with the market and catch up on signals missed during the week.
The markets are closed Friday so there will not be a newsletter published. Again I will have a video ready for you on Saturday and I will be hosting my radio show on Saturday.
Here is a link to listen live to my show on Saturday – http://www.iheart.com/live/1190AM-4276/?autoplay=true
Here is the link to ensure that you are subscribed to the weekend update video –
http://noramassetmanagement.com/newsletter/ Please feel free to pass this along.
Best Regards,
Tim
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
Tim Reazor
Chief Investment Strategist
NorAm Asset Management
You don’t have to make understanding the markets so difficult. I’ll give you that they are counterintuitive, but days like today –violent 100-point swings – don’t have to wear you out.
How you can trade and invest like we do here at Noram Asset Management? Learn how to spot sector and subgroup rotation. Also you need to pay attention to the correlated assets. For this market the correlated assets are Japanese Yen and Bonds. If bonds and Yen are lower then most likely you’ll see stock markets move higher. If bonds and yen are higher then markets will most likely trade lower.
The correlation was in full effect today. Bonds and Yen were soft at the open; they caught a bid and then started racing higher. Their peak coincides with the Nasdaq hitting and bouncing off its 200-day simple moving average. As you can guess bonds and Yen fizzled into the close and markets rallied.
Easy is the new black… it doesn’t always have to hurt to try and make money in the market– open your mind to uncovering the “easy” trade.
The question you now have is how can I make money with this information like we do here at Noram Asset Management. How can I find the “easy” trade? First you need to know what is correlated. Secondly you then need to understand how to spot a potential move higher in stocks or an asset class. For two plus weeks bonds have been firming up. I’ve been discussing this at length on my radio show and in my weekend update videos.
What’s the easiest way to be a bear in this market without the stress? Use bonds or bond ETFs like TLT. If you’d like to know what I expect out of bonds in the near term watch this video – http://noramassetmanagement.com/wp-content/uploads/2014/04/Meet-Now-4-11-14-6.40-PM.mp4
The last piece of the puzzle is learning how to position your portfolio for the move. If you’re curious as to how we do this please visit me in my office and trade with me. I’ll be happy to show you.
To schedule an appointment send me an – Tim.Reazor@NorAmAsset.com
If you’re not in the Dallas/Fort Worth area we can meet online using WebEx or GoToMeeting
I hope you find this information helpful. If you have any questions or suggestions please let me know.
Best Regards,
Tim
The information presented is for educational and entertainment purposes only. Opinions and information expressed are based upon information considered reliable. However, factors are constantly changing and should not be relied upon. You need to do and verify your own research.
Moreover, no reader or listener should assume that any information or discussion presented serves as personalized investment advice from NorAm Asset Management, Inc. or from any other investment professional, and is not an offer of solicitation for the sale or purchase of any specific securities, investments, or investment strategies. You need to have your own, individual investment advice suitable for your personal situation.
Investments involve risk and unless otherwise stated are not guaranteed.
Tim Reazor
Chief Investment Strategist
NorAm Asset Management
You’re expecting the market to blow up any day now…. You’ve loaded up on puts and you’ve shorted all the high fliers. And what do you have to show for your efforts… a market that for the most part finished where it started today. Yes, stocks were soft and internals were weak, but come on! Where is the mass destruction? Where why isn’t NFLX at 100 already?! Read on my bearish friend.
The market doesn’t care what you want – it’s a market – it’s not your friend – it’s a cold and bloodless entity. It often times doesn’t make sense. Take Monday’s action – the Nasdaq futures we’re plus 40 heading into lunch, reversed to negative territory and closed higher. It makes no sense – and here in lies my point – don’t guess directions in a market as fickle as this one. Again, read on my bearish friend.
Most markets after selling off for some time will retrace back to the mean or to resistance. That resistance can be a key moving average – think 8, 21 or 34 period exponential or a 50-day simple moving average. After they hit these key levels they will then reverse lower and continue their downward march. You’ll want to construct your short trades around these zones of resistance. If you jump in too early you’ll most certainly be feeling the heat. You’ll also want to use smaller size incase you get caught up in a relief rally.
If all of this sounds to hard or nauseating do keep in mind that cash is a position. If you’d like some guidance on how you can make money in this market shoot me an email. We’re utilizing specific techniques for our clients designed for this market environment.
If you’d like a more in-depth explanation of what is working please watch my video from this past weekend – http://noramassetmanagement.com/wp-content/uploads/2014/04/Meet-Now-4-11-14-6.40-PM.mp4
Back to the subject of what to expect when you’re expecting. If you’re expecting markets to go lower and you have an aversion to risk you can still participate. By risk averse I mean less risky than shorting stocks or buying directional puts. The easiest way to be a bear in the market is to buy TLT which is the iShares 20 year + bond ETF. If markets are going to continue lower TLT will continue to go up.
Here’s what to expect from TLT in the near term. If markers push lower TLT will most likely clear current resistance at $111 and head north of $113. If markets are still heading lower TLT will consolidate at the 113/115 level. If the correction is severe enough – TLT could challenge last spring’s high of $124. Don’t bet on this. Take the trade in stages and make it prove itself along the way.
About NFLX – there is a strong possibility that NFLX will rally to its 8-period exponential moving average on the daily chart which sits at $141. NFLX is currently trading at $331 – then again this market doesn’t care what I think….
Best Regards,
Tim
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