Is A Stock Sell Off Very Near?

[BigBrandonAllenFan]

Signs are pointing to a May selloff of stocks, and many top analysts are predicting such. 

The US markets have hovered near flat for the last week or so, with the NASDAQ slightly down.  Futures for tomorrow are off fairly sharp, (NASDAQ current minus 50 points).  Now, with market driver Apple taking a big hit in share price, investors will likely wake up tomorrow as scared as they can be.  The futures are already showing the impact the day after Apple's poor report.  Add all that together and it does not bode well for any near term market gains in my personal assessment.

I have all my funds in Fed Reserve where a dollar will still be worth a dollar if the markets go to pot.

I'm going to continue staying safe on the sidelines for a while.

What do you folks think?  Staying in?  Getting out?

[ricepig]

Signs are pointing to a May selloff of stocks, and many top analysts are predicting such. 

The US markets have hovered near flat for the last week or so, with the NASDAQ slightly down.  Futures for tomorrow are off fairly sharp, (NASDAQ current minus 50 points).  Now, with market driver Apple taking a big hit in share price, investors will likely wake up tomorrow as scared as they can be.  The futures are already showing the impact the day after Apple's poor report.  Add all that together and it does not bode well for any near term market gains in my personal assessment.

I have all my funds in Fed Reserve where a dollar will still be worth a dollar if the markets go to pot.

I'm going to continue staying safe on the sidelines for a while.

What do you folks think?  Staying in?  Getting out?

Still fully invested, I remember some of you nervous Nellies getting all bothered in February.........

[Kenny Hawgins]

It's going to come down, just a matter of when.  At this point, the fed is propping up a market that they know is vastly overvalued. 

I saw some figures from BAC recently showing that individual investors, hedge funds, and institutions were all currently net sellers for a while.  Who was buying?  Corporations buying back their own stocks.  Once that momentum that lead into earnings slows, we may see some downward momentum build.

[BigBrandonAllenFan]

Still fully invested, I remember some of you nervous Nellies getting all bothered in February.........

I can't deny, RP.  Nervous Nellie to a T is me.  I've kept 75% of my money on the sidelines since pretty much the end of January.  I could have indeed made some good moves, and I have missed out on making more money on the few stocks I have traded since that time, but the Nervous Nellie Syndrome grabbed me by the golf balls and hasn't let go yet. 

You have big golf balls, RP. 

[BigBrandonAllenFan]

It's going to come down, just a matter of when.   At this point, the fed is propping up a market that they know is vastly overvalued. 

I saw some figures from BAC recently showing that individual investors, hedge funds, and institutions were all currently net sellers for a while.  Who was buying?  Corporations buying back their own stocks.  Once that momentum that lead into earnings slows, we may see some downward momentum build.

My fear exactly.  It is a near impossible guess as to exactly when the decline happens, but I can't imagine the market not getting really shaky legs as November nears.  When Obama was first elected in Novemeber of 2008, the "BIG FALL" didn't happen until January of 2009.

And you will find many market analysts that will agree the market is currently over valued and propped up by the Feds. 

I hate sitting on the sidelines, but I hate losing chunks of money even moreso.

[ricepig]

I can't deny, RP.  Nervous Nellie to a T is me.  I've kept 75% of my money on the sidelines since pretty much the end of January.  I could have indeed made some good moves, and I have missed out on making more money on the few stocks I have traded since that time, but the Nervous Nellie Syndrome grabbed me by the golf balls and hasn't let go yet. 

You have big golf balls, RP. 

Not really, this is an investment for me, not trading. I trade commodities and a few Etf's where I'm in and out, but my stock portfolio hasn't changed a whole lot over time.

[Kenny Hawgins]

My fear exactly.  It is a near impossible guess as to exactly when the decline happens, but I can't imagine the market not getting really shaky legs as November nears.  When Obama was first elected in Novemeber of 2008, the "BIG FALL" didn't happen until January of 2009.

And you will find many market analysts that will agree the market is currently over valued and propped up by the Feds. 

I hate sitting on the sidelines, but I hate losing chunks of money even moreso.

I don't know that the market can hold out till November.  Summer months tend to bring drawdowns anyways so I could easily see a 10-20% drop in the next few months.  Honestly, by the time it's all said and done, I expect we'll see a 40-50% correction.

I tend to look at technicals and we clearly have a long term downward trend.  Even though we've broken through the trendline in the last week or two, I suspect that it's a false breakout.  Also, the trading volume is extremely low. 

My preference is trading in indexes (SPX, RUT, etc) but I'll typically follow their primary ETFs so, for the S&P for instance, I'll follow SPY since it's so highly traded.  Just to give you an idea how low the volume has been, the average daily volume for the last year on SPY has been slightly over 125 million.  In the last two weeks, we haven't had a single day over 100 million and in the last five trading days, the average volume has been ~80 million.  It seems that the majority of folks are scared to get anywhere near the market right now.

To some extent, this would depend upon your conviction that the market will drop but, if you feel strongly enough that it will, you could buy long-term put options on an index ETF like SPY.  If you buy with a December 2018 expiration, you really don't have to worry about timing as much.  Also, volatility is currently low so, as a result, options prices are much lower at the moment. 

[BigBrandonAllenFan]

I don't know that the market can hold out till November.  Summer months tend to bring drawdowns anyways so I could easily see a 10-20% drop in the next few months.  Honestly, by the time it's all said and done, I expect we'll see a 40-50% correction.

I tend to look at technicals and we clearly have a long term downward trend.  Even though we've broken through the trendline in the last week or two, I suspect that it's a false breakout.  Also, the trading volume is extremely low. 

My preference is trading in indexes (SPX, RUT, etc) but I'll typically follow their primary ETFs so, for the S&P for instance, I'll follow SPY since it's so highly traded.  Just to give you an idea how low the volume has been, the average daily volume for the last year on SPY has been slightly over 125 million.  In the last two weeks, we haven't had a single day over 100 million and in the last five trading days, the average volume has been ~80 million.  It seems that the majority of folks are scared to get anywhere near the market right now.

To some extent, this would depend upon your conviction that the market will drop but, if you feel strongly enough that it will, you could buy long-term put options on an index ETF like SPY.  If you buy with a December 2018 expiration, you really don't have to worry about timing as much.  Also, volatility is currently low so, as a result, options prices are much lower at the moment.

Good stuff, K Hawgins. 

I'm happy on the sidelines of the NASDAQ right now.  Things are weird.  While the DOW has inched ahead this week, the NASDAQ has had 3 losing days in a row.  I'm thinking the Apple drop probably has much to do with those losing NASDAQ numbers, as the NASDAQ is heavily invested in Apple and other tech stocks in general.  All I know is I likely saved about 2% of my money so far this week by not owning anything.  In reality, that is a win in itself.

The last time the DOW reached 18,000, the NASDAQ peaked alongside at 5200.  The DOW is now again at 18,000, but the NASDAQ is at only 4850, or roughly 8% behind last year's curve.  I figure when Apple begins a rebound, it'll take the NASDAQ back up with it.

If I were buying a single stock right now, I'd go ahead and grab a modest piece of Apple, then look to double if it went down another 6 or 7 percent.  It's not going to drop much more, if any.  It may go flat for a little spell, but it ain't going broke.  The world's most sophisticated computer systems are Apple, and always will be in our life time.   

[BigBrandonAllenFan]

Not really, this is an investment for me, not trading. I trade commodities and a few Etf's where I'm in and out, but my stock portfolio hasn't changed a whole lot over time.

One of these days I want to get a handle on trading commodities.  I don't know a lot about it.  I probably should take the time to study it.

[Kenny Hawgins]

Good stuff, K Hawgins. 

I'm happy on the sidelines of the NASDAQ right now.  Things are weird.  While the DOW has inched ahead this week, the NASDAQ has had 3 losing days in a row.  I'm thinking the Apple drop probably has much to do with those losing NASDAQ numbers, as the NASDAQ is heavily invested in Apple and other tech stocks in general.  All I know is I likely saved about 2% of my money so far this week by not owning anything.  In reality, that is a win in itself.

The last time the DOW reached 18,000, the NASDAQ peaked alongside at 5200.  The DOW is now again at 18,000, but the NASDAQ is at only 4850, or roughly 8% behind last year's curve.  I figure when Apple begins a rebound, it'll take the NASDAQ back up with it.

If I were buying a single stock right now, I'd go ahead and grab a modest piece of Apple, then look to double if it went down another 6 or 7 percent.  It's not going to drop much more, if any.  It may go flat for a little spell, but it ain't going broke.  The world's most sophisticated computer systems are Apple, and always will be in our life time.   

Nothing wrong with that at all.  I read a book recently, which you may find interesting, called Quantitative Investing.  It's a quick read and has some pretty solid info. 

One thing that I was surprised by is the simplicity, yet robustness of some of the strategies that the author suggested.  One strategy that he backtested, for instance, was to stay invested in a broad ETF (he used SPY) when the 50 day SMA was above the 200 day SMA.  Over a 10-12 year period (I can't remember exactly) starting in the early 2000's, simply using this strategy would have resulted in triple the gains made if one had stayed in the S&P during the entire period.  It's amazing how effective it is to avoid losing money. 

By the way, I don't know about how Apple would handle a significant correction.  This time may be different but in 07-08, their share price dropped over 50%. 

[BigBrandonAllenFan]

Nothing wrong with that at all.  I read a book recently, which you may find interesting, called Quantitative Investing.  It's a quick read and has some pretty solid info. 

One thing that I was surprised by is the simplicity, yet robustness of some of the strategies that the author suggested.  One strategy that he backtested, for instance, was to stay invested in a broad ETF (he used SPY) when the 50 day SMA was above the 200 day SMA.  Over a 10-12 year period (I can't remember exactly) starting in the early 2000's, simply using this strategy would have resulted in triple the gains made if one had stayed in the S&P during the entire period.  It's amazing how effective it is to avoid losing money. 

By the way, I don't know about how Apple would handle a significant correction.  This time may be different but in 07-08, their share price dropped over 50%.

I will definitely take a gander at the book.

And for Apple, IF the Apple car becomes reality, I don't think there is much question Apple stock will surge. Investing now could end up as a double your money play in a couple of years.

As for today, the US markets took a dive.  DOW down over 200 and the NASDAQ down 56 (1.2%).  The markets will probably ride flat at best tomorrow.  I could see another significant classic "Friday" sell off.  I may be wrong.
 

[Kenny Hawgins]

I will definitely take a gander at the book.

And for Apple, IF the Apple car becomes reality, I don't think there is much question Apple stock will surge. Investing now could end up as a double your money play in a couple of years.

As for today, the US markets took a dive.  DOW down over 200 and the NASDAQ down 56 (1.2%).  The markets will probably ride flat at best tomorrow.  I could see another significant classic "Friday" sell off.  I may be wrong.
 

I won't complain about a Friday sell-off; I made a pretty decent profit this afternoon and if the S&P can pull back a few support lines over the next week, it should ramp up volatility and I'll be selling premium like hot cakes. 

[BigBrandonAllenFan]

NASDAQ down another 50 points so far today (Friday).  DOW down 130.

Never been happier to be on the pine watching the show.

So far, the sell off hasn't been as massive on a daily walk as the last sell off went, but nonetheless, the tires are still deflating it appears.  Investors are grabbing gold, as it continues to surge and is nearing $1300.00 an ounce.  I sold my gold shares way too soon, although I gained a nice profit when I did sell, but man I wish I would have ridden the train a while longer.  I'd be nearing 50% profit as of now.  Woulda coulda shoulda...

I'll look to get back in the market in the next few weeks.

[Kenny Hawgins]

NASDAQ down another 50 points so far today (Friday).  DOW down 130.

Never been happier to be on the pine watching the show.

So far, the sell off hasn't been as massive on a daily walk as the last sell off went, but nonetheless, the tires are still deflating it appears.  Investors are grabbing gold, as it continues to surge and is nearing $1300.00 an ounce.  I sold my gold shares way too soon, although I gained a nice profit when I did sell, but man I wish I would have ridden the train a while longer.  I'd be nearing 50% profit as of now.  Woulda coulda shoulda...

I'll look to get back in the market in the next few weeks.

If the fed sees fit to continue with their easy money policies, it may not be too late to get back into gold.  They seem desperate to manipulate the markets into not correcting, even if it means further serious devaluation of the dollar.  They're already finding excuses to leave rates static in June; personal income numbers are barely up, GDP numbers are low, and of course, the 'Brexit' (I hate myself for using that term).

Here's an interesting article that you guys may enjoy, btw. 
http://www.hussmanfunds.com/wmc/wmc160418.htm

[jim shell]

yea it will go down, but how much? and it will go up also....who knows which way or how much?

[BigBrandonAllenFan]

yea it will go down, but how much? and it will go up also....who knows which way or how much?

Indeed Jim Shell.

K Hawgins is right about being to late to get back on the bus for gold.  I sold my Fid Gold back when it was at 16.00 per share.  Since then it has continued to go up to over 22.00 now.  I took a good profit because I had bought at 13.00. 

I have a feeling it could go to 1350.00 but beyond that is anyone's guess.  After you've sold out like I did, you can't come in and buy at a higher price.  Just not good investment strategy to do that.

And I bookmarked your Hussman page, KH.  Very good speculative article.

[Kenny Hawgins]

Indeed Jim Shell.

K Hawgins is right about being to late to get back on the bus for gold.  I sold my Fid Gold back when it was at 16.00 per share.  Since then it has continued to go up to over 22.00 now.  I took a good profit because I had bought at 13.00. 

I have a feeling it could go to 1350.00 but beyond that is anyone's guess.  After you've sold out like I did, you can't come in and buy at a higher price.  Just not good investment strategy to do that.

And I bookmarked your Hussman page, KH.  Very good speculative article.

Check out GLD.  If it breaks resistance around $125.50, you might look to get back in.  It went as high as $185 a few years back and with the current unease about the state of the market, it'll probably build momentum.

[BigBrandonAllenFan]

Check out GLD.  If it breaks resistance around $125.50, you might look to get back in.  It went as high as $185 a few years back and with the current unease about the state of the market, it'll probably build momentum.

Will do.

Monday futures are off sharply.  DOW futures down 113 points  NASDAQ futures down 50 points.

We are yet to have a "drastic" day, but the numbers are stepping down steadily and don't appear to be near a rebound.

I'm looking at a Fidelity fund I have owned twice before, FNAPX.  I am still restricted to buying one day per quarter through December, so when I make a move, it has to be a good one.  I may buy a fairly large chunk of FNAPX if it goes down another forty or fifty cents.  It is priced lower now than it's inception price of 4 1/2 years ago.  If I buy right, I think I can grab 10% in a month or two.  Check the 5 year chart>>>

http://www.marketwatch.com/investing/fund/fnapx

 

[PEtrader]

Will do.

Monday futures are off sharply.  DOW futures down 113 points  NASDAQ futures down 50 points.

We are yet to have a "drastic" day, but the numbers are stepping down steadily and don't appear to be near a rebound.

I'm looking at a Fidelity fund I have owned twice before, FNAPX.  I am still restricted to buying one day per quarter through December, so when I make a move, it has to be a good one.  I may buy a fairly large chunk of FNAPX if it goes down another forty or fifty cents.  It is priced lower now than it's inception price of 4 1/2 years ago.  If I buy right, I think I can grab 10% in a month or two.  Check the 5 year chart>>>

http://www.marketwatch.com/investing/fund/fnapx

why dont you move your funds to someone who doesn't restrict your trade volume?

[Kenny Hawgins]

why dont you move your funds to someone who doesn't restrict your trade volume?

My thoughts exactly.  I know if you're holding winners, you may not want to cash out but if they're in stocks/ETFs, you should be able to buy back in pretty easily with a new brokerage. 

Not sure if you've looked at other places but I have accounts with TD Ameritrade and Options House and don't have any major complaints. 

With Ameritrade, I really like the ThinkorSwim platform because they have a ton of studies that I find useful, and I've also been able to write a few scripts for my own indicators.  The only complaint that I really have about them is the pricing of their trades; I trade options and the fees add up.  $10 per trade + $0.75 per contract; if I were to sell 20 options spreads with 2 contracts per spread, that's $40.  If I close the trade before expiration, that's another $40.

Options House is the first platform I learned.  It's very user friendly but I've found it to be limited in the tools that it has available.  On the other hand, the fees are much cheaper ($5 per trade + $0.50 per option contract; big difference if I'm making several trades/week). 

If you want to check out something cool and have a background in coding (or don't mind trying to learn), there's a website (quantopian.com) which allows you to write your own algorithms for trading, backtest them, and if you so choose, deploy it live (they're partnered with Interactive Brokers and Robinhood).

[Kenny Hawgins]

Will do.

Monday futures are off sharply.  DOW futures down 113 points  NASDAQ futures down 50 points.

We are yet to have a "drastic" day, but the numbers are stepping down steadily and don't appear to be near a rebound.

I'm looking at a Fidelity fund I have owned twice before, FNAPX.  I am still restricted to buying one day per quarter through December, so when I make a move, it has to be a good one.  I may buy a fairly large chunk of FNAPX if it goes down another forty or fifty cents.  It is priced lower now than it's inception price of 4 1/2 years ago.  If I buy right, I think I can grab 10% in a month or two.  Check the 5 year chart>>>

http://www.marketwatch.com/investing/fund/fnapx

 

By the way, I checked out the fund.  The one thing that I'm curious about is that it seems to have a poor correlation to broader market indexes.  From fund inception till December 2013, it seems to move almost in lockstep with the Russell 2000 (small cap index).  At that point, it dropped significantly while the RUT went up ~10% over the next 1.5 years.  Since you've traded it before, do you what their major holdings were/are that caused the fund to break with the RUT?  I'm a bit curious.

[BigBrandonAllenFan]

why dont you move your funds to someone who doesn't restrict your trade volume?

Well, at this point, I'm going to try to beat the game with 3 well timed moves.  It is a 403b acct, and TIAA is my other option. 

Yesterday I invested 75% of my funds in FNAPX as my only buy for this quarter, leaving 25% of my funds in Fed Reserve.  The market was down, but I think the Trump phenomena will carry the NASDAQ upwards in the near term.  I think I can can grab seven to ten percent in the next few months on the FNAPX buy and sell right back out.  If I can do that 4 times a year, I can still clip for around twenty to twenty-five percent profit overall.  I'm content with that number. 

[BigBrandonAllenFan]

By the way, I checked out the fund.  The one thing that I'm curious about is that it seems to have a poor correlation to broader market indexes.  From fund inception till December 2013, it seems to move almost in lockstep with the Russell 2000 (small cap index).  At that point, it dropped significantly while the RUT went up ~10% over the next 1.5 years.  Since you've traded it before, do you what their major holdings were/are that caused the fund to break with the RUT?  I'm a bit curious.

I make 95% of my purchases buy simple graph study.  Pretty simple concept that has always worked well for me.  I pay little to no attention to coincidental matters.  Pretty much the same strategy Warren Buffett often applies.  When I spot a mutual fund that is tanking down low on the post near and long term graphs, I buy it.

[BigBrandonAllenFan]

Bought a big chunk of FNAPX yesterday at $9.75 per share.  Hoping I didn't jump in too soon.

[BigBrandonAllenFan]

fnapx hovering at the price i bought in at. still a good buy imo.

[Kenny Hawgins]

Interesting article I read yesterday.  Didn't realize that Soros was so bearish on the markets.

http://valuentumbrian.tumblr.com/post/144563080730/soros-icahn-nelson-hedge-for-market-fall

[BigBrandonAllenFan]

I have a great tip>>> Don't buy Target, TJ Maxx, or Marshall's stock.  Unless you have a uncontrollable urge to burn your money.  Investors have jumped off Target's ship like it was hit by 50 Phoenix missiles.

[Kenny Hawgins]

May have to wait a little longer for a sell-off after the rally the last couple of days.  Still think that it's headed down over the summer, barring any changes in macros.  Charts look very similar to the end of December, right before a big drop.

Right now, I'm trying to find cheap energy companies.  Just bought several calls on C&J Energy services.  It's right around .42 per share after being $35 two years ago.  They're an oilfield services company dealing with well construction, which should pick up again next year.  I'm hoping it'll be a good value pick.

[BigBrandonAllenFan]

Bought a big chunk of FNAPX yesterday at $9.75 per share.  Hoping I didn't jump in too soon.

Bought the above FNAPX 27 days ago at $9.75 per share.  Today's close was $10.41 per share.  That puts the investment up 6.8% in 27 days.  FNAPX has been on a slow steady gain.  I have to pay 3/4% early redemption for 29 days or less of owning the stock, so I'm still 2 days away from keeping that 3/4%.  I'm gonna continue to hang tight on the stock for a little while though.  I put 70% of my total funds in the buy.  FNAPX was as high as $14.85 a share just 2 years ago...I think the stock is probably going to near $11.00 in the next month, and the fund has realistic range up to $12.00.   

http://www.marketwatch.com/investing/fund/fnapx