$TLT $UCO $UGLD all trading together. All three on buy signals but the market has roared back last 2 days. Next week should be fun!
Check this out , no moving averages aren’t the be all and end all to trading but check out these moves the AT&T (T)
End of 2016 the 5 ema (green) crossed above the 20 simple (red)
This time we see the exact opposite trade. The 5 (red) ema crossed below the 20 (red) simple moving average.
You could have hedged or sold some shares $2.50 ago. Or what I often do is take notice, follow the sell off till it bottoms…then price usually move sideways. When price turns bullish and makes it move higher the moving averages will alert me. The 5 (green) ema will cross the 20 (red) sma.
I call my trade plan the money flow. I don’t short. I’m not against shorting I realiz it can make money. Look at this $gold chart only recently.
When the green line (5 ema) crosses below the red (20 sma) signals prices are in bearish trend. When the green (5ema) crosses above the 20 (red) sma it signals prices have turned bullish.
The moving average is just one indicator and used alone isn’t near as effective as combing it with additional indicators. I look for 6 indicators. I only need 5 to make a decision of price direction and or position size.
I have 6 criteria for buy or sell signal in my trade plan. I want to have 4 of 6 before making an actual move on a trade. Well today we got all 6 in one trading session. Ouch…! But good news CEFL gave us warning signal last week. I got 2 charts I want u to look at,
First the $SPY –
TSI, MACD, near term support, price closed below the 20 day simple moving average, no debt in morning 5 ema will close below the 20 sma. All six in one trading session.
This presents opportunity to buy my fav blue chip stocks on sale starting tomorrow. Look charts of $mcd $pep $csx. They have gone straight up last few months. I’m thinking deploying some my gains into less preforming positions like $dal $ge $f $sbux $t $vz
Now let’s look at CEFL. It gave us little more warning. I got long toward the end of march. By beginning of May I was up $1.15 a share and the RSI, MACD, and the TSI signaled overbought. I sold enough shares to bring home the $1,150 profit. Then the end of last week I get a sell signal on MACD and TSI So I sold 500 shares at $18.05. This afternoon the market got hit pretty good and price moved well under the 20 day simple moving average and broke near support. That is 5 of 6 decision indicators I look at for confirmation. I sold additional 500 shares.
I am now 50% in cash with my 2x leveraged income fund. Now I ride the wave, collect coupon payments on 1000 shares and wait for the next buy signal.
Market getting hit hard this afternoon. Dow down 300+ as of this post. Support is a few hundred points lower so I image further downside is coming. High Yield not escaping this broad sell off.
I got first wind this would happen few days ago. My post then was the indicators (MACD) were signaling sell even though price was still above the 20 day simple moving average. That was my clue to sell 1/4 of my position or 500 shares to lock in some gain. I am now selling remaining 500 shares reducing me to half position or 1000 shares and large cash position over $20,000. This includes several months of coupon payments plus upside profits from the last buy signal.
I do not short the market in this portfolio. Instead I go to half position or 1000 shares and ride the market wave. This allows me to continue to collect nice coupon payments on the remaining 1000 shares while holding a large cash position to deploy when market conditions improve. Buy and hold timing model you might say.
I qualified for coupon payment on 2000 shares on May 10th. Payment should be approximately $500 payable on May 22nd.
On May 14th gold mining stocks closed above the 20 day moving average. I initiated a position added to it on 15th. Today we got our break out. We are now in new trend cycle. How long will it last? Who knows…but the place to be in long. Same is true for gold. Gold should digest some of this gain before moving up much higher. My profit target on nugt is $45 range.