Mike Simonato, Ontario. Presenter: “Investing for the Long Term”, presented to the Feb. 6, 2021 International Online Forum, you can watch by CLICKING HERE.
Well my off-season market curse continued this week. (Even Stan had to acknowledge it Tuesday). However the market gave us a gift on Friday which I will go into detail in my 2nd email and show what I’m doing in preparation for a market turnaround if and when it comes as well as answer a question I got this week.
To summarize the market activity this week in very simple terms. Everyone held or bounced off some kind of support however Friday’s activity was not enough to get a PW UP so still a little early to bet the farm. The key Earning Trend Indicators were all steady except Britain which fell.
In almost every country we are in Bottom Fishing territory. The Canadian views by Stan Heller showed a way to prepare for Bottom Fishing Opportunities. In my 2nd post, I will show another way to do bottom fishing that Prudent Punks like me do that can also pay quite well.
To keep it simple again, Be sure to Read the USA, Canadian, British and Australian Views. These are all very timely and important views. Also be sure to read all the different strategy sections. NOTE the USA actually had a Bullish Divergence this week. This caught me by surprise.
This will sound like a broken record but here are the market summaries.
USA MTI 45 BSR 17
DOW JONES: Held support Big buying vol Fri Watch next week for further clarity on trend
NASDAQ: Bounced off support but price really went no where this week
S&P 500: Bounced off support but stuck below the 200 SMA
MKT TIMING: Holding strong support An entire year of gains gone
CANADA MTI 58 BSR 15
PTSE: Holding the 200 SMA and support Watch next week to see if it can hold
VENTURE: Holding a support line but still a weak-looking graph
MKT TIMING: Holding a support line but stuck below another resistance line
GOLD Holding a Major support line
AUSTRALIA: MTI 62 BSR .09
MKT TIMING: Bounced off support but stalled at the 50% retrace line
BRITAIN: MTI 69 BSR 37
MKT TIMING: Price in no man’s land Stuck below major resistance
EUROPE MTI 79 BSR 48
MKT TIMING: Held Major Support
A GIFT FROM THE MARKET.
On Friday the market gave us an awesome gift. I will show you how I take advantage of the gift as well as give some other ideas on how we can benefit from this awesome gift.
First and foremost to benefit from this gift you will need 3 things. These are a must if we are to benefit from this amazing opportunity:
- We Must have a Trading Plan or Strategy that we have tested and proved it works for our trading style.
- We Must have our Shopping lists made ahead of time. These will be in our Watchlists.
- We Must be willing to adapt to what the numbers are showing us.
NOTE The following is nothing more than my 2 cents and should not be taken as Investment advice!!!
First to answer a question I got this week. When do I sell? I’m a Buy and Hold Trader so for me I want to Buy only good quality well-run companies. There are only 2 reasons I would sell. 1. The story changes (this could be new management, the industry no longer works etc ) or 2. The Market Trend changes.
Because I’m a long-term holder of my stocks, I look at a Weekly chart. I use the 79 SMA and 200 SMA as my guides. If you look at the graph below, the 79 and 200 SMAs are still trending solidly higher. Second, let’s look at Apple that reported earnings this week. A well-run company that is well capitalized, diversified and has adapted well to supply chain issues. Also, they are number 1 in China again which is huge because the Chinese love their I Phones and I Pads and regularly upgrade and all of this was reflected in a solid earnings report. The resulting pop made Warren Buffet close to $10 Billion (with me close behind) So all of the above is why I will continue to hold. I view this recent pullback as an opportunity to add to positions or buy new quality Buy and hold names.
Here is what I do regarding Friday’s Price action
- I already know what I’m interested in so what I do is run quick Tests to see where the money went on Friday. So I ran Bob Turnbull’s ETFs both CDN and USA to confirm I’m still on the right track (Note on one attachment it has the ETFs for the CDN MKts as well. I’m not interested in these as they always underperform but I have a meeting tomorrow and I’m lazy and wanted one chart to tell everything)
- I look at the stocks on my buy list to confirm that my plan is still on track or do I need to adapt. Result I need to adapt. My 2 buys re Debit/ Credit were Paypal and Mastercard however the results show the money went into Visa. So I did a little deeper dive and Visa has adapted to the new reality including a Crypto Card which brought in Billions so based on yesterday’s action I may switch to Visa and Mastercard. I will confirm when I’m ready to pull the trigger.
IMPORTANT You MUST LEARN to IGNORE STUPID ie Bill Akman bought over $1 Billion in Netflix stock and gave his reasons. First, while that sounds like a big amount in reality among the big boys that’s the equivilent of me buying 10 shares of Amazon. Note Netflix is one of the worst performers in the CDRs.
3, Crypto has been beaten down as well as everything else and while I view it as a very high risk sector when Stan mentioned it as one of his Nov picks it got me interested so look at both the CDN and USA Crypto plays I may just put a position on at the right time.
The following is for those who like to do this sort of thing. I know many buy the banks both for the Price appreciation and dividends but note how money left the banks yesterday. Another focus for many is Dividend plays. Note how money did seem to go into this area.
What about Energy. While this continues to be strong and that strength is expected to continue, being the punk that I am I want to be sure I’m picking the best and the safest. So what I do is do a 1 month QuickTest and I did a shorter QuickTest. What I am looking for is consistent results I want to avoid Hot today and Cold tomorrow. When I compared the 2 QuickTests there were no duplicates in the top 5 which would get me to not bother but for those who can’t stay away ARK and NVA were the only 2 in the top 10
I hope this has been of interest to some. There are many ways to make money in the market and it is crucial we find what works best for us as individuals because that is the only way we can succeed. There are only 3 things that the market can do. Go up. Go Down or go sideways. Once we identify the trend then and only then can we make money. Another key to remember is it doesn’t matter what the market does. The only thing that matters is How WE REACT to what the market is saying.
A perfect example of how we can all trade one strategy differently will be highlighted in next Saturday’s International Forum. Bob Turnbull has kindly shown us his amazing strategy and how he trades it. Me personally, I’m a Buy and Hold guy and trade it accordingly. Don Reitsma next week will show how he trades it and yes he is another very successful trader, so take the time to figure out what works best for you personally and let’s all work together and enjoy a well-funded retirement.
As always nothing more than my 2 cents and I hope it’s of value and interest