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Now where do we go?

11/21/2015

The 2015 re-run of the 2011 chart has played out perfectly so far. The S&P made it down to the 2000-2020 target by hitting 2019 on Nov 16th, before rallying to 2097 on Nov 20th.

The downside target of 2000 to 2020 was hit on the S&P at 2019. The rally has now taken us to 2097 before backing off a bit on Friday. I did put on a small short position as the rally started fading from the 2097 level. At this point it seems as if we may trend a little lower, maybe to the 2060 level or so before resuming higher. Either way I feel I need to have at least some shorts on here as a hedge as I build the January Effect portfolio. So far I have targeted SKUL and TUES to be included in the portfolio and will add to those positions over the next few weeks. I am also looking to buy FCG as the energy component of the portfolio. FCG is a natural gas/oil ETF that may get some January Effect buying after the tax loss season. The components of the fund are generally small to mid-cap names. Here is the complete portfolio composition today:

https://www.ftportfolios.com/retail/etf/ETFholdings.aspx?Ticker=FCG

2015 chart finally playing out...

11/13/2015

2015 chart playing out like the 2011 chart now

The 2015 and 2011 chart playbook is now underway (see posts below). Unfortunately I did not expect the current market to creep much higher than 2080 and of course (because the market will spread as much pain as possible) I had to trim my short position down somewhat as we broke above 2100. Downside is most likely around 2000 to 2020 before the obligatory Santa Rally, but we shall see. I have added a few names to my watch list for the 2015/16 January Effect portfolio. The names I am watching so far are SKUL - TUES - SCX - FHCO. I will add others soon.

November and starting research for tax season...

11/3/2015

My favorite trading strategy each year is building my "Tax Loss" - "January Effect" portfolio. This is generally a two to three week trade where I purchase beat-up small and micro-cap stocks with tax selling through November and December adding downside pressure. Since this selling tends to be exaggerated, there can be a slight to moderate reflex in price towards January and beyond... Hence the "January Effect".

I generally do limited research aside from chart/price action and I attempt to find more value related stocks (low P/E - low price to book value - below liquidation value if negative earnings). The second issue is when to start buying. Some stocks seem to sell off all the way through December 31st, when others seem to start getting buyers in the first few days of the final month. So I generally buy a few shares here and there and build the position over a couple weeks. I also like to find at least five stocks for the portfolio, so if I get one or two bad trades out of the bunch it won't kill the whole return. Market performance during Dec and Jan obviously also has a big effect on the general return of the trade, with poor market performance translating into flat/no returns or good market performance leading to outstanding returns.

Since energy has done so poorly this year I am assuming that those stocks would dominate any screens I perform. Therefore I will most likely limit the portfolio to just one energy name to keep it balanced. I will post updates as I add stocks in Dec.

Now where do we go?

2015 chart finally playing out...

November and starting research for tax season...

Paul Saad

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