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Friday, June 26, 2015

System 12 Plus. 6-2015

.this update covers activity from 6/29 to 8/14/2015.

Last System12 update was published in March post (link).
There where only a couple trades in past 3 months, because of system restrictions and filters.
The only change to MD Control index happened just recently with Walmart replaced by JPMorgan.
FaceBook is coming up fast through Second Dozen... I never thought it could get this far. Never. Not for a second. Thus is a superior nature of System12 as a stock selection tool, despite personal biases and recent experiences. Speaking of which, BABA will have all filters and indicators up and valid in a couple of months. I am eager to run a CSI on AliBaba and see whats it really made of.

I am writing this on following Monday, June 29. I was waiting for this - a 2% day, a minus 2% as it happen to be. No worries though, System12 had been mostly in cash for months, as I wondered why... why nothing works... why leaders don't lead... why index is so sticky... why no volume... why many of my indicators just pooped on themselves... why so many why's?
Today Greece defaulted on defaulted bonds, closed banks and stock market, limit ATM withdrawal to 60euro and basically turned all markets to shit. Guess Greece matters after all... Wasn't it a common knowledge that... and blah-blah-blah. I don't care, as I am really fucking sick and tired of this range bound, constantly reversing sloppy price action on most of indexes and averages since winter. Individual stocks are mostly no better, and various ETF's gone completely illiquid.
Anywhere is better than here.
Up/down - I don't care. Really


BOT: PG on 7/29
SLD:FB on 7/20; GOOGL on 7/23
DIVI received: none

This is MD:


MD Control:WMT out, JPM in
Disqualified: XOM, BRK, PTR, JNJ
Earnings: start July 14 with WFC, JPM, JNJ, followed with GOOGL and GE on 16th

This is SD:

 I've been mentioning some Mega Dozen (MD) under-performance since the beginning of the year. Its not a lame excuse or a feeling. Equal weighted index of these stocks (aka MD Control) had been visibly lagging behind S&P500 index (SPX), even more so lately. Picture presented below is the reason why I don't just plow all money into these 12 stocks and call it a day. Certain qualifiers has kept me safely off this bunch of laging dullards, until the time they 'be back" (extra Terminator)

Last time chart was updated a year ago in June 2014 in this post (link).

Important notes about use and limitations of KREM index in this post (link) from March, 2015.

Originally I thought that KREM need to be rebalanced monthly. That turned out unnecessary - these ETF's are remarkably sticky. It seems that changes happened about quarterly and may be even less often. This time around I have two replacements:
SOCL and SEA out; SMH and MOO in.


Full KREM list has 55 long only stock etf's, but the problem is - good portion of them are absolutely un-tradable. Some of them are so illiquid, with gaps and wide bid/ask spread, its all but impossible to trade on-stop. Since I am working this method into System9 ,where I don't use market or limit orders, there was a need for a more practical list.



Three top slots on first link are an actual Dow Theory: industrials, transports and utilities.
Some etf's here are kind-of the best from the illiquid bunch, currently serving as placeholders of the sorts, until something better comes along or they come back to life: ITA, SKYY, SOCL etc

Full KREM list is here:

An observation:
Some of these etf's are misleading somewhat in their descriptions and composition.
For example, XHB Homebuilders ETF is holding only about 33% in actual home-builder stocks. The rest of it is loosely related, wide array of building supplies, appliances, furniture, security etc ... why not include a woman's shoe store for a good measure... them shoes go into the house too.. no?  ... ehh

more coming... may-be enough for now

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