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Thursday, April 9, 2020

Dart v3. Large List.

About 250 stocks for Large Permanent Dart List (La PeDaLi)
expected to be updated and reviewed quarterly or semi-annually 
DART, version 3, Best List will be selected from LaPedali for foreseeable future.

Simulator https://www.marketwatch.com/game/dart-v3/portfolio

Finance  -finviz link-  26
Tech  -finviz link-  22

Food and Farm -finvis link-  9

Consumer and Services -finviz link-  45

Auto and Trucking and Rail  -finviz link-  24

Health  -finviz link-  31

Industry  -finviz link-  71
Defense, Airspace
Ind wholesale, Build mat, Contractors
Electrical and Water
Wood, Metal, Waste

Basic Materials  -finviz link-  44
Oil and Gas
Refiners, Pipeline

Wednesday, October 2, 2019

100 Weeks Box

UPDATE 3/31/2020

Half a year ago I wrote:
"NYSE is setting up either bullish or bearish pattern"
Now I can add:
"... or BOTH."

Technical analysis alone is not enough to successfully speculate in financial markets -
I figured that out long time ago, put out an article back in 2014 (post link) and
incorporated this thinking into my stock market dealings, permanently and without exception.
Here is why:

Wednesday, March 13, 2019

Double Dip T

In 2018, broad market indexes topped at the end of January, crashed and based over Spring, followed by mild and low-participation rally that managed to push S&P into nominal new highs. All that fizzled at the end of Summer and market, followed by economy, slid into double-dip recession which (hopefully) ended on Christmas Eve 2018.

Based on Advance-Decline statistics of NYSE, market exhausted itself on either August 29 or September 21, 2018 and went into cash buildup phase according to T-Theory.

Traditional placement of a center-post of the Time Symmetry (aka T) - into lowest reading of A-D for this cycle - produces 64 to 80 days of natural rally from the Low, projecting late April of 2019 High for Stocks. However, in recent years, this measurement had been inadequate - either pointing to a temporary pause in up-trend or to outright unremarkable period.

Surprisingly accurate results had been achieved by waiting for a Last low before the breakout of Advance-Decline line, although this judgement is quite subjective and open to interpretation.
Nevertheless, this Last low before the breakout of A-D line seemed to happened 3 days ago (last Friday March 8) and getting confirmation today (if it holds). Cash build-up phase for this T (appearing in green on a chart) is 114-130 days, projecting High in Stocks sometime in September 2019, with usual 10% margin of error...

... like I don't know that stocks always top and fall in the Fall...
... well, not always always, but typically they do...

Wednesday, October 17, 2018

Best List notes

'Best List' - a collection of sensibly valued investable stocks - is a cornerstone of DART Method.
Best List is not that big. Over past couple of years it held 30-60 stocks and sometimes less. I also use other similar settings to zero in on faster growing companies, get more yield or better diversification.

Typically, Best List stocks stick for awhile (sometimes for years), often get bought out by larger players or go private, and usually represent REAL companies dealing in non-digital world. Normally, composition of Best List changes slowly, except during major market turns or dislocations. We seem to be having one right now.

About a year ago it looked like this:
Best List select 6/8/17 (finviz link)

Only a month ago I was still working from this:
Best List select 9/12/2018 (finviz link)

Shortly after that DART started to self-liquidate. I wasn't too sure what the sudden softness was all about, but knew better than to disregard sell rules.
Note, this is probably the LEAST diversified iteration of Best List, full of industrial companies that fell thru the fucking floor boards like an anvil.

Now, the all new Best List seems to be developing from October 2018 rubble.
Traditionally, I exclude the biggest mega-cap stocks from Select List, but making a note: JNJ, CSCO, DIS, MDT, NKE, COST are here. Two of them are System 12 stocks (JNJ is an open position right now); Three of them are System 9 stocks (I traded NKE this year up until publicity scandal).
There more of them just behind the fold.

10/24/2018 Best List Select ---Finviz link---
This list looks to be in flux, due to recent market selloff, earnings season that is unfolding and pointless election jitters. As I write this on 11/7/18, full 3 weeks since starting this post, I still cannot make up my mind on a composition of Best List Select. However, now I am hard pressed to allocate into stocks, as MADI went on 'buy' signal yesterday (November 6) and seems to be holding today. This may be a whipsaw move - a counter trend rally in ongoing bear market, or a peak between two bottoms- in which case MADI will stay around zero line for a period of couple of days to a couple of weeks, then markets will tank with horrific stop-outs and bottom some time in December. On the other hand, any further strength this week will solidify October bottom.

I'll start here

DART v2 simulator: https://www.marketwatch.com/game/dart-v2-2018/portfolio

Noting something strange.
DART v2 excludes stocks with short interest of over 10% on premise that short-sellers smell blood and circling the waters, however a certain group of stocks emerged, with abnormally high short ratios for otherwise strong businesses or improving charts. The group is not homogeneous, but rather well diversified with several subgroups of related companies (this is how you can tell that this is an actionable Select List and not just a statistical aberration).


High Short Float List (HSFL) is not meant for immediate investment, although HRL looks really tempting, EGOV is a gov. monopoly, HCSG is a solid business, FANG is a Fast Grower and CALM + SAFM earnings historically fluctuate from nothing to everything and back... yet all of them sport a double-digit short interest.

Let me explain - there is NO way for all of the retail bears in the World to short 20% of the stock's float. It is technically impossible in today's regulatory environment. The only place this type of share-borrowing can happen is at institution, like a major investment bank or huge index fund or big asset manager.
This is why - it is very dangerous for the small operator to get involved with these kind of speculations.
In other words: they will not fight with you, they will fight amongst themselves and mow you down in a process.

UPDATE 4/8/2019
Just came to my attention that NTRI (Nutrisystem diet scam) was bought out back in December at 25% premium, but still some 30% below its 2017 high. Everybody lose...


Friday, September 7, 2018

Dow Paradox Strikes Back

Dow Paradox has been my modus operandi for many years.

Five years ago, almost to the date, I wrote here (link):
The purposeful manipulation of index components is designed to produce positive outcome, thus creating an upward equity slope - an illusion of increasing wealth and prosperity - The Dow Paradox!
In a sense of this phenomenon,  2018 is off the charts. A great calamity started in a beginning of this year, when S&P Global (the main purveyor of indexes galore) and MSCI (the other snake oil peddler) announced massive changes to their industry classification structure - GICS. The monumental reshuffle of sectors and industry groups (started with removal of REITs from Financial sector not so long ago) continues with introduction of all new and shiny Communication Services sector.

I am not about to second guess wizards of S&P Global, besides it makes a whole lot more sense to keep Google and Facebook out of Technology sector, but this thingy will have quite an eclectic mix. Alongside of presently defined Telecoms (like AT&T and Comcast), new sector will also include publishing, movies, entertainment and interactive media - companies taken from Tech, IT and Consumer sectors.

I will be updating and revising System9 Consolidated Watch List, once 'rotation of 2018' is over. These type of changes are nothing new to me and don't cause any disruption to my investment process, because I operate strictly according to Dow Paradox and generally geared towards capitalizing upon its nature and reality. As for everybody else - watch out when walking under tall buildings - they will be tossing all that laborious intermarket relationship research and weighty sector rotation models right out the fucking windows.

Current S&P500 allocation, according to Spiders (link):

On June 19, Walgreens pharmacy (WBA) replaced General Electric (GE) in Dow Jones Industrial Average. GE had been a longest continuous member of DJIA, stayed in it from very beginning, but visibly lost its way over past couple of decades. Formerly the bluest of blue chips, and seemingly perpetually biggest industrial company in the World, is now a pale reflection of itself. GE never recovered from the financial crisis (GFC), moreover - it sits now near 2009 lows, priced at 1/5 of its 2000 high. (chart from Yahoo)

This is not the first rotten 20 years stretch GE had to endure. Presented in a chart below is a period from 1962 to 1982 (prices adjusted for splits and dividends, i think), with big green candle of August 1982 that kicked out a monster 60x bull run culminated in a chart above.

Before my dear readers (all two of you) get all hot and bothered about long term prospects of banned light bulb maker, jet engines and locomotives and nuclear reactors builder, hospital and biomed equipment manufacturer, lending bank and more of god knows what - I want to remind that all this gobbledygook and squiggly wiggly lines on a chart means exactly dick (for making money in trading). GE is sort of an index of itself - a gigantic conglomerate of businesses that changed hugely overtime. So much so, that essence of Dow Paradox must be applicable to this single and somewhat unique stock.

From the same article of 2013:
What is a point of doing long term technical analysis on a price chart of $INDU or DIA, or SPX, or many other so called 'indexes' ,when composition changes so much - its not the same index, not even close. Companies dropped from major index suffer massive outflows, sometimes for years, and often even go bankrupt (remember Kodak).
I don't think that fate of Kodak will befall upon General Electric.  Unlike Kodak (who's product went extinct), GE still makes important things, employs 300 thousand people, with sales of over 100Bil (P/S is 0.89!), almost 4% divi, and presence in 180 countries (out of 196 total).

I will not be making any predictions about GE future price movements, nor I will offer a trade recommendations. Rather, I want to make an observation - GE was one of 12 biggest stocks in USA for years. As such, its been a permanent member of System12, and I traded it on several occasions with last trade sold a bit over $30 in September 2016 (post link). System Rules never provided a new entry into GE up until October 2017, when this thing fell off Mega Dozen, tumbled through Second Dozen and became disqualified from System12.
Read more about System12 here (link).

Tuesday, May 22, 2018

2018 Spring T

Double top and double bottoms in NYSE Advance Decline line makes for too many possible top dates. I focus on a longest projection targeting mid-August top, unless recent lows gets taken out.
T-Theory has been spot on for few years now, with recent T's overrunning their projected top dates. This is an indication of a very strong, one way bullish market. Spring T of 2018 will show if it remains to be so.

I am making this note before 2013 runs off the chart,
There is a possibility of a very large Rate T, spanning almost 10 years starting in 2013 - Teen Rate T.
30-Year Treasury Bond yield peaked at 3.93% on week of August 19 and then double-topped 15 weeks later at 3.97% on week of December 2, 2013. From there yield collapsed to 2.22% in early 2015 and produced a Rate T (I had it laid out here).

What if that was just a beginning? Next low, the lower low, came on week of July 5, 2016 at 2.1%. The span of left side of the T from highest high to lowest low is 135 weeks, with projection for "Low in Stocks" week of February 4, 2019. Plus / minus 10% margin of error of base range and keep in mind a previous high of interest rates 15 weeks earlier - rout in stocks can last from October 2018 till end of summer of 2019. Difficulty in projecting a very large, multi-year time symmetries is that ripples from price movement gets smeared over extended time-line and lose their predictive powers, making trading on this type of analysis very difficult in real time. I just want to take these measurements before data runs off a left side of free chart. Continue...

Apparent multi-year resistance at 3.2% level opens a variant of a "last low before the breakout".
Note: breakout has not happened yet. We may be in a process of it now, it may happen later or not at all.
The span of left side of the T is 196 weeks from highest high to last low of 2.65% on week of September 5, 2017, projecting a Low in Stocks around week of June 7, 2021. Since my crystal ball is fuzzy at such distances, I say period of softness in stock prices may last from spring of 2021 to summer of 2022.

In other words, bear market in stocks that started on January 29 of this year (2018) will last 4 long years and will bottom in a first half of 2022 somewhere south from here.

... or
stocks rally thru summer 2018, perhaps making a nominal high above January top
then have a traditional crash in September - October, linger into Spring 2019,
double bottom or new panic lows in Summer 2019,
followed by face-ripping rally till the end of 2020,
culminated with mother of all bear markets in 21-22
... or


Zooming in into 30-year bond yield, I am tempted by a Rate T in development since the beginning of 2017. Presented below is a double top around 3.2% in December 2016 and March 2017. First measurement pointed to week of March 5, 2018 with actual low in stocks arriving 2 weeks later (within the margin of error). The next projection hits on week of May 29. Beyond that i am not sure. To seriously consider 2 green time symmetries I need to see 3.2% level decisively taken out, but so is a Teen Rate T, with corresponding conclusions.


UPDATE 4/9/2019
RATE T of 2017-2019 seems to be completed now.
That last light-green symmetry is no longer valid, because it was based on "last low before breakout" notion.
Breakout at 3.2 yield has failed at the end of 2018.
With lower low in 30year yield at the end of March 2019 - there is a good chance that a new Rate T is underway. Destination unknown.

Tuesday, June 27, 2017

VIDEO: T Theory Observations for Summer 2017. Conflict T.

Conflict T projects summer top, while Rate T projects low of stocks. We may see some MOVES...

Winter T of 2016-2017 , mentioned in this video, is here:

Rate T projections of 2017 Low in Stocks was explained in December 2016 video: